Key moments
Consumer price inflation dips
The rate of growth in UK inflation dipped to 3.4 per cent in May, down for 3.5 per cent in April but well above the Bank of England’s 2 per cent target.
The largest downward contribution to the monthly change in CPI inflation came from transport. Richard Heys, acting chief economist at the Office for National Statistics, said air fares fell during the month compared with a large rise at the same time last year, as the timing of Easter and school holiday affected pricing. Petrol prices were also lower.
He said this was partially offset by rising food prices, particularly chocolates and meat. The cost of furniture and household goods, including fridge freezers and vacuum cleaners, also increased.
FTSE 100 set to open slightly higher
The FTSE 100 is forecast to open 8.5 points higher when trading starts at 8am. The index of leading UK shares had its worst day in two weeks yesterday as the conflict between Israel and Iran continued. Airlines fell, while BP and Shell rose on higher oil prices.
On Wall Street, President Trump’s early return from the G7 leaders’ summit dashed investor hopes of updates on any new trade agreements, leaving indices lower after a strong start to the week. In Asia, Japan’s Nikkei 225 was up 0.77 per cent, but China’s SSE Composite was flat.
The pound, which was trading close to $1.36 against the dollar early yesterday, has weakened to $1.3444 but is up slightly in early trading on a weaker dollar.
Oil price trades at near five-month high
The oil price is trading around a near five-month high on worries that the Iran-Israel conflict could disrupt supplies in the Strait of Hormuz, which carries a fifth of the world’s seaborne oil.
Brent crude futures, which rose 4 per cent on Tuesday, dipped 0.13 per cent to $76.36 a barrel, down from close to $68 a barrel during Asian trading after President Trump called for Iran’s “unconditional surrender”.
Iran is the Opec’s third-largest producer, pumping out around 3.3 million barrels a day of crude oil. However, analysts at Fitch said that while disruption to Iran’s production or export infrastructure would add upward pressure to prices, “even in the unlikely event that all Iranian exports are lost, they could be replaced by spare capacity from Opec+ producers … around 5.7 million barrels a day.”
