Inflation Surge Dampens Rate Cut Hopes Amid Stock Movements

London's primary stock indexes experienced a subdued session on Wednesday as an unexpected rise in domestic inflation cooled speculations of impending interest rate cuts by the Bank of England. The blue-chip FTSE 100 posted a minor increase of 0.2% by 1035 GMT, whereas the midcap FTSE 250 index remained flat.

The annual consumer price inflation in Britain surged to 3.6% in June, marking its highest in over a year. This surge was driven by increased costs of motor fuel, transport, and food. Investment analyst Dan Coatsworth from AJ Bell noted the looming threat of stagflation as inflation rises while the economy stagnates, complicating monetary policy decisions for the Bank of England.

A reduction in interest rates by the central bank, anticipated following weaker domestic growth and labor market data, faces uncertainty after the inflation data released on Wednesday. The Bank of England is expected to scrutinize employment and wage figures scheduled for Thursday. Meanwhile, UK finance minister Rachel Reeves announced reforms to boost the finance sector, while corporate giants like AstraZeneca saw notable stock movements amidst experimental study results and production reports.

(With inputs from agencies.)