Inflation figures have a negative effect on shares and the pound

The FTSE 100 and the pound both sank lower yesterday after traders digested the latest UK inflation figures, which stoked fears of a recession later this year.

Figures from the Office for National Statistics revealed that Consumer Price Index (CPI) inflation rocketed to 9% last month on the back of a surge in energy prices.

Retailers were once again among the losers over the fear rising prices will hit consumer spending in the coming months.

The FTSE 100 ended the day down 80.26 points, or 1.07%, at 7,438.09 points.

“The pound has dipped slightly lower as worries about a recession have reared up again after UK inflation jumped to the highest level in 40 years,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

“With the spectre of stagflation looming, there are expectations that the Bank may be forced to take more of a softly-softly approach to rising interest rates further with the risks that a very aggressive policy risks tipping the UK into a deeper downturn.”

The pound decreased by 0.2% against the dollar to 1.238, but increased 0.02% against the euro to 1.181.

Elsewhere, other markets in Europe pulled back after US Federal Reserve chairman Jerome Powell said he would not hesitate to raise rates to keep inflation down. The German Dax decreased by 1.26% by the end of the session, while the French Cac fell 1.2%.

On Wall Street, the message also hit sentiment sharply, with the Dow Jones and S&P both opening lower.

In company news, Ambrosia and Bisto manufacturer Premier Foods climbed during the session after the group’s pre-tax profits jumped 16.4% to a higher-thanexpected £102.6 million in the year to April 2.

Shares in the food group were 10.8p higher at 117.4p at the end of play.

The price of oil fell as reports in Beijing highlighting rising infection rates took the steam out of a recent rise driven by hopes of improving demand in China. Brent crude decreased by 1.76% to 109.96 US dollars per barrel when the London markets closed.

“Worries about a recession have reared up again