UK shares edge higher as benign inflation data reassures investors

UK shares rose marginally on Wednesday after softer-than-expected April inflation offered relief to investors, though sceptics warned the reprieve would be temporary.

The blue-chip FTSE 100 index gained 0.13% as of 10:40 am GMT, while the midcap FTSE 250 climbed 0.29%.

• Consumer prices in April rose by an annual rate of 2.8%, compared with March's figures of 3.3% and expectations of 3.0%.

• That prompted some analysts to question the need for rapid rate hikes by the Bank of England, especially as data released on Tuesday also showed the unemployment rate ticking up.

• "We continue to think markets are overestimating the Bank of England's willingness to tighten policy," said James Smith, developed markets economist, UK, at ING.

• On Monday, the International ​Monetary Fund had also said that the central bank may not need to raise rates to get inflation down to its target.

• Still, others warned that inflation may tick up in the coming months as the impact of higher oil prices due to disruption in the Strait of Hormuz flows through.

• "Some people might be scratching their heads that the headline inflation figure for April came in at just 2.8%. But this bright spot is set to be relegated to the past in the months to come," said Danni Hewson, head of financial analysis at AJ Bell.

• Aerospace and defence stocks rose 1.6%, thanks to a 3.2% gain in shares of defence contractor Babcock International Group after Peel Hunt upgraded the stock to "buy" from "add".

• Retailer Marks & Spencer rose 4.2% and was the biggest gainer on the FTSE 100 after forecasting it will return to profit growth this year.

• Investors are also contending with a noisy political backdrop, as questions about Prime Minister Keir Starmer's future persist.

(Reporting by Niket Nishant in Bengaluru; Editing by Vijay Kishore)

Copyright Reuters or USA Today Network via Reuters Connect.

This story was originally published May 20, 2026 at 4:01 AM.