A very sticky British inflation

Yesterday’s session started well after the IMF said it no longer forecasts a recession for the UK. However, indices retreated after the release PMI data, which was a bit disappointing, with services growing in May, but less than in April, while manufacturing dropped again, trailing declining Chinese manufacturing in Q2 2023.

S&P Global's Composite PMI remained in growth territory, but fell to 53.9, down from 54.9 in April.

The FTSE 100 closed 0.1% lower and fell a further 1.4% this morning after the release of CPI data. It showed that core inflation – which excludes volatile components such as food and energy – soared to a 31-year high in April to 6.8%, fuelling expectations of further rate hikes by the Bank of England.

Overall consumer price inflation fell to 8.7% in April from March's 10.1%, the Office for National Statistics said. This is higher than the 8.6% expected in the Reuters consensus of economists.

Among stocks, Marks and Spencer jumped 12.1% after it unveiled an upbeat guidance including annual revenue growth.

Ocado Group fell 1.5% after the latest set of indicative index changes from FTSE Russell, showed it will move from the FTSE 100 to the FTSE 250, while firm IMI should replace it in the blue-chip index.

Things to read today:

Global inflation tracker: see how your country compares on rising prices (Financial Times)

Inflation Has Peaked—Get Ready for Deflation (WSJ)