With U.K. inflation rising above the Bank of England’s (BoE) benchmark to 2.1%, European stocks at large opened higher on Wednesday morning. Despite data showing that the national cost of living had reached its highest levels in May since 2019, the FTSE 100 still opened up 0.6%.
While analysts expected the consumer price index (CPI) to rise, the increase to 2.1% is significantly higher than the analysts’ projected rise to 1.8%, from April’s 1.5%.
According to official figures reported by the Office for National Statistics, the transport sector had the largest influence on the significant change in inflation. Other rising prices that pushed the inflation rate upwards included clothing, fuels, and recreational goods such as games and electronic media. The CPI rose by 0.5% in May alone.
Hargreaves Lansdown personal finance analyst Sarah Coles made the following statement: “The Bank of England was always expecting inflation to overshoot its target this spring, but it has taken the position that this is a short term blip caused by rock bottom prices a year earlier, and as soon as they naturally fall out of the figures, inflation will drop away again.”
Across the Atlantic, investors eagerly await the US Federal Reserve interest rate announcement scheduled to be made later on Wednesday.
