London-listed shares experienced a notable rebound on Wednesday, with the FTSE 100 index advancing by 0.97% at closing. This increase followed the release of recent data indicating that UK consumer price growth eased more than anticipated in September. The Office for National Statistics reported that the UK's annual inflation rate for September was recorded at 1.7%, down from 2.2% in the previous month and significantly below the consensus estimate of 1.9%.
Core inflation also exhibited a decline, standing at 3.2% compared to 3.6% in August, which was above the market estimate of 3.4%. In addition, services inflation, closely watched by economists, also fell during September, decreasing to 5.6% from the earlier figure of 4.9%. This decline has ignited hopes for a faster easing in the Bank of England's monetary policy agenda. TS Lombard provided insight into the economic outlook, stating, "As inflation settles lower, this leaves the UK economy struggling to maintain momentum amid a relapse in consumer confidence and a weaker fiscal impulse.
With lackluster employment keeping concerns about inflation persistence at bay, the bar for the Monetary Policy Committee (MPC) to adopt a progressively more 'activist' stance on rate cuts, as recently suggested by Bank of England Governor Andrew Bailey, is moving lower. We pencil in another couple of rate cuts this year and expect the Bank Rate to reach 3.5% by December 2025 based on our central economic forecast." In other relevant economic updates, the latest data from ONS revealed a significant drop in producer input prices in the UK, which fell by 2.3% year over year in September, a notable drop when compared to the revised decrease of 1% in August.
Furthermore, producer output prices declined by 0.7%, diverging from the revised growth of 0.3% just the month prior. On the corporate front, Whitbread emerged as the top performer among blue-chip companies in the UK, seeing an impressive rise of 6.05% at closing. The British hotel and restaurant chain reaffirmed its guidance for fiscal 2025, despite reporting a decline in profit and stable revenues for the fiscal first half..