Britain’s FTSE 100 index notched a fresh record close on Wednesday, driven by gains in consumer-focused and utility stocks, even as stronger-than-expected inflation data dented hopes of an early interest rate cut by the Bank of England (BoE).
The blue-chip FTSE 100 rose 1% to finish at an all-time high, surpassing intraday records set last Friday. The more domestically oriented FTSE 250 also edged higher, closing up 0.2%. Both indexes recovered earlier losses as investors weighed the inflation report against corporate and sector-specific gains.
Official figures showed the UK’s annual consumer price inflation accelerated to 3.8% in July, the highest in 18 months and the fastest among Group of Seven economies. The reading was close to the BoE’s forecast for a 4% peak in September, prompting traders to push back expectations for a rate cut. Market participants now see a quarter-point reduction in March 2026, compared with earlier bets for a cut before the end of 2025.
The latest data sparked concern in interest rate-sensitive sectors. Homebuilders slipped 0.2% amid fears that higher borrowing costs could further squeeze mortgage affordability. The aerospace and defence index also came under pressure, sliding 1.7% after suffering its steepest one-day fall in four months on Tuesday.
By contrast, consumer stocks led the FTSE 100 higher. Unilever, Reckitt, and Tesco gained between 1.2% and 3.2%, while the broader healthcare sector rose 1.8%. Financials also advanced, with banks climbing 1.4% and non-life insurers up 1.7%. Utilities posted some of the strongest gains, rising 1.9%, boosted by a 3.5% rally in United Utilities after Barclays upgraded the stock to “Overweight” from “Equal Weight.”
Among standout individual performers, Ithaca Energy surged 10.4% to its highest level in nearly three years after the oil and gas producer raised its 2025 production outlook. Medical equipment maker Convatec also jumped 5.6%—its best day since March—after unveiling a $300 million share buyback programme, signaling confidence in its balance sheet and growth prospects.
Market analysts said the session highlighted the resilience of consumer-facing sectors despite macroeconomic headwinds. “Investors are rotating back into defensive stocks like healthcare, utilities, and consumer staples, which offer some shelter in an environment where inflation remains sticky and rate cuts are further away than hoped,” one analyst noted.
With inflation running hotter than anticipated and the BoE still cautious on policy easing, markets are bracing for a prolonged period of elevated borrowing costs. For now, however, robust gains in corporate earnings and sector-specific optimism are keeping London’s stock market buoyant.
