The FTSE 100 index of leading shares tumbled 124.47 points, or 1.6%, to 7,433.87 by mid-morning after the Office for National Statistics (ONS) said the headline measure of prices went up to 4% in December from 3.9% in November.
The rise caught City analysts on the hop. Most had forecast another small fall in the Consumer Prices Index (CPI) to 3.8% or 3.7%.
The gilts market also showed its displeasure, with the yield on the two-year bond jumping around 11 basis points to 4.276%.
Sarah Coles, head of personal finance at asset managers Hargreaves Lansdown, said: "This bounce in inflation isn't a massive movement, and isn't dramatically different to the forecasts, but it's a surprise, and the markets really don't like surprises. It's a salient reminder that inflation is likely to trend downwards from here, but not particularly fast, and with plenty of bumps along the way.
This story is from the January 17, 2024 edition of Evening Standard.
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This story is from the January 17, 2024 edition of Evening Standard.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
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