BUSINESS LIVE: UK inflation rises to 2.2%; Balfour Beatty profits jump; Flutter enjoys strong second quarter

Nicholas Hyett, investment manager at Wealth Club, said:

Economists had expected a bit of an inflationary heatwave over the summer, as the effects of lower food and energy prices started to drop out of the numbers and core inflation continued to run hot.

In the event, the inflationary heat has picked up a bit, but not quite to the degree that had been feared.

Crucially core inflation continues to fall steadily and is now at its lowest level since September 2021. It’s this number which is key to the long term outlook for the UK and which will drive Bank of England interest rate decisions. All economies are buffeted by global commodity prices, it’s domesticely generated inflation that policy makers focus on.

Services inflation remains higher than you might like, at 5.2%, although did fall thanks mainly to a substantial fall in hotel costs year-on-year.

As a labour intensive industry, hotel prices can be a bit of a bellwether for the wider labour market – so softness here, coming after lower wage growth yesterday, will be reassuring. The Bank is probably feeling pretty pleased about the timing of its first rate cut at the moment.

Sarah Coles, head of personal finance at Hargreaves Lansdown, comments on the latest inflation figures:

Higher inflation has had the most highly anticipated comeback since Abba, after the Bank of England repeatedly flagged that it was on the way, and that it wasn’t anything to get inordinately concerned about.

This is no Waterloo. It actually came in marginally behind expectations, because economists were pencilling in a 2.3% rise.

It’s not massively welcome, especially for people hoping to be able to enjoy the new space in their budgets created by wage rises, but it’s not a huge upset either.

It’s likely to be business as usual at the Bank of England in September, with rates on hold, so it’s unlikely to alter the picture significantly for savers and borrowers.

Finally, investing in Britain is back in vogue! A day after India’s wealthiest telecoms tycoon bought a chunky stake in BT comes a new poll showing the London Stock Exchange is the favourite of all of Europe’s stock markets, streets ahead of Germany and well above France and Spain.

What’s more, the Bank of America survey says investors now view London’s top blue-chip stocks as safe bets due to their defensive nature, particularly in volatile times.

The London stock market is now the top choice among European investors while sentiment towards the single currency bloc collapses.

In a major vote of confidence in Britain, a survey by Bank of America found increasing numbers of investors plan to buy UK-listed shares over the next year.

The crisis engulfing Asda has deepened amid a summer slump at the private equity-owned supermarket.

In a bleak update, research group Kantar said Asda sales tumbled to £4.26billion in the 12 weeks to August 4, down 6 per cent on the same period in 2023.

When America sneezes the rest of the world catches a cold – it’s the oft-quoted adage that reflects both the dominant role the US economy plays across the world, and the importance of its share and bond markets to the wealth of investors everywhere.

Well, in the past few days it may not yet have sneezed, but there are certainly sniffles.

AstraZeneca has become the first UK firm to be valued at £200billion as its ambitious push into developing a pipeline of cancer drugs pays off.

In another boost for chief executive Pascal Soriot, as well as an army of investors, shares in the pharmaceuticals giant rose 1.1 per cent, or 140p, to a record 12,920p close.

Inflation rose above 2 per cent in July in the first increase this year, official figures have shown.

The Office for National Statistics said the rate of Consumer Prices Index (CPI) inflation rose to 2.2 per cent in the 12 months to July, up from 2 per cent in June.