FTSE 100: London jumps on sharp fall in shop price inflation as eurozone avoids recession

London’s FTSE 100 closed higher on Tuesday, helped by a sharp fall in shop price inflation and figures confirming that the eurozone avoided a recession at the end of last year.

The bluechip index jumped 0.44 per cent at the close to 7,666.31, while the FTSE 250, which is more aligned with the health of the UK economy, closed 0.2 per cent higher at 19,349.50.

A new reading by the British Retail Consortium showed shop price inflation has fallen to its lowest level since May 2022, helped by supermarkets continually slashing their prices. 

Shop price inflation eased to 2.9 per cent in January, down from 4.3 per cent in December. 

Food inflation also decelerated to 6.1 per cent down slightly from the prior month, and is the lowest level since June 2022.

The eurozone avoided a recession at the end of last year, but sluggish performances from the bloc’s largest economies ensured that growth remained elusive.

Official figures confirmed today that the eurozone avoided a recession at the end of 2023, stagnating in the final three months of last year. The data marked an improvement on the 0.1 per cent contraction expected by economists.

Elsewhere, the International Monetary Fund now thinks Germany, rather than the UK, will be the slowest growing economy this year, but it still slashed forecasts for the UK next year.

Investors are looking ahead to the Bank of England’s next Monetary Policy Committee meeting on Thursday, where policymakers are expected to leave interest rates on hold for the fourth time in a row as the UK economy teeters on the brink of recession.

The US Federal Reserve is also expected to leave rates on hold this week, but traders will be looking for any signs of a dovish pivot.

The Bank of England’s Prudential Regulation Authority dished out its second biggest fine ever at £57.4m to banking giant HSBC this morning over “serious failings” in protecting customers’ deposits.

Gambling firm Flutter, which owns PaddyPower and US giant Fanduel, said yesterday that New York would be its “natural home” in another blow to London’s bruised and battered stock exchange.

Diageo, the drinks giant behind Guinness and a host of top-shelf spirits, has seen growth slip in every region across the world, dragging profits sharply southward. It was dragged down by a particularly grim performance in Latin America.

Cheshire-headquartered Pets at Home has also warned its profits will not be as high as previously forecast after its retail sales faulted.

A leading firm testing infectious diseases, hVIVO, has reported a record year as it looks to start work on an £80m orderbook in 2024.

It reported revenues of £56m for the full 2023 financial year, ahead of market expectations and up 15.5 per cent from the £48.5m it hit in 2022.

Oil and gas well owner Diversified Energy today reported production up to 136,800 barrels of oil equivalents per day up from 135,000 this time last year.

Over 50s specialist Saga reported a “stronger than expected” six months this morning after announcing last week that it was looking to sell a stake in its cruise business to cover its debts.

It revealed that over the last six months, revenues increased by between 10 to 15 per cent, while underlying profit before tax for the firm more than doubled compared to the previous year.

Speedy Hire has issued a profit warning despite it performing “resiliently in the face of cost inflation and macroeconomic uncertainty”, saying it has been impacted by “weakness in some of our end markets and seasonal product lines, and some delays in mobilisation of significant contract wins”.