FTSE 100 slips on inflation worries, Premier Foods tops midcaps

2 minute read

People shop at market stalls, with skyscrapers of the CIty of London financial district seen behind, in London, Britain, January 15, 2021. REUTERS/Toby Melville/

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  • Premier Foods lifts midcap stocks
  • UK inflation surges to 9%, highest since 1982
  • FTSE 100 down 1.1%, FTSE 250 off 0.6%

May 18 (Reuters) - UK's blue chip index fell on Wednesday as data showed inflation jumped 9% last month, fuelling fresh worries about the economic toll from surging prices, while Premier Foods topped midcap stocks after it announced plans to raise prices.

The FTSE 100 index (.FTSE) closed 1.1% lower snapping a three-day winning streak, while the mid-cap FTSE 250 index (.FTMC) fell 0.6%.

British inflation leapt in April to its highest annual rate since 1982. Soaring energy bills were the biggest driver, reflecting last month's increase in regulated energy tariffs. read more

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"The risk is that should they (the Bank of England) raise interest rates too quickly at a time when consumers are already feeling the pinch, then this could crimp demand and push the economy into recession," Ambrose Crofton, global market strategist at J.P. Morgan Asset Management, said.

"Doing too little, however, risks entrenching inflation expectations and driving a more persistent wage-price feedback loop."

A report on Tuesday showed Britain's unemployment rate fell to its lowest since 1974 in the first three months of this year, reinforcing expectations that the central bank will need to continue raising rates to fight inflation. read more

Sterling slipped after a recent run-up against the dollar.

Premier Foods (PFD.L), the maker of Mr Kipling cakes and OXO cubes, added 10.1% to become the top midcap gainer, as it said it will raise prices of its products as part of plans to tackle rising input costs. read more

Pub operators Marston's (MARS.L) and Mitchells & Butlers (MAB.L) slid 7.2% and 1.4%, respectively, after they warned that the cost of living crisis and expenses stemming from the Ukraine conflict would crimp their businesses. read more

European travel company TUI's UK-listed shares fell 12.9% after it announced a share sale to pay back elements of a German state bailout that it had received during the peak of the pandemic. read more

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Reporting by Sruthi Shankar and Amal S in Bengaluru; Editing by Uttaresh.V and Shounak Dasgupta

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