London's FTSE 100 edged lower on Wednesday as market participants digested the latest UK inflation data and housing market figures ahead of the Bank of England's upcoming interest rate decision. The benchmark index fell 0.14% to 10,479.77 points, while the domestically focused FTSE 250 declined 0.4%.
Consumer staples, utilities, and energy stocks were the primary drags on the broader market, though select banking and homebuilder shares provided some support.
Inflation Steady at 2.8% in May
Official data released Wednesday showed that UK consumer price inflation held steady at 2.8% year-over-year in May, matching April's reading. This came in below economists' consensus estimate of 3%. On a monthly basis, the CPIH rose 0.2%, in line with the same period last year.
The inflation figures prompted traders to slightly reduce expectations for a rate hike later this year, as the data suggests price pressures remain contained. The Bank of England is widely expected to hold rates steady at its upcoming meeting, but the inflation outlook will be key for future policy decisions.
Sector Performance: Consumer Staples and Energy Weigh
Consumer staples stocks were among the biggest decliners. British American Tobacco fell 1.7%, contributing to sector weakness. Utilities shares recorded the sharpest decline among major sectors, falling 1.1%. Energy stocks also came under pressure as oil prices remained steady below $80 a barrel, with both BP and Shell declining 0.7%.
Banking Stocks Provide Support
Despite the broader market weakness, some banking stocks posted gains. Barclays rose 2% after BofA Global Research raised its price target on the lender. Standard Chartered also advanced 1.3%, providing a lift to the financial sector. For context on broader market moves, see our coverage of FTSE 100 Slips 0.1% as Middle East Tensions Offset Energy Rally.
House Prices Record Strongest Annual Growth in Over a Year
Fresh data from the Office for National Statistics showed UK house prices recorded their strongest annual growth in more than a year during April 2026. Average prices increased by 3.8% year-over-year, compared to a revised 0% in March. This was the strongest annual rise since March 2025, before Stamp Duty Land Tax changes took effect.
Month-over-month, prices rose 0.7% between March and April, a sharp reversal from the 2.9% decline seen in the same period a year earlier. Property transaction levels also remained significantly higher than year-earlier levels. The stronger housing data boosted homebuilder stocks, which gained 1.5% during the session. For more on how inflation data is influencing other markets, see Gold Retreats From 2% Rally as Oil Spike Threatens to Undermine Inflation Relief.
Hays Advances on Asset Sale
Recruitment company Hays rose 1.5% after announcing the sale of its operations in six European countries, providing a bright spot in an otherwise cautious session.
While housing-related stocks and select financial names offered pockets of strength, broader market sentiment remained cautious as investors await further guidance from the Bank of England on the outlook for interest rates and the UK economy. The central bank's decision will be closely watched for any shifts in tone regarding inflation and growth. For a look at how US inflation data is impacting global markets, see US Producer Prices Drop 0.3% in June as Energy Costs Plunge, Easing Inflation Fears.
This article is for informational purposes only and does not constitute financial advice.
