Early market roundup: Stocks mixed as UK grocery price inflation eases

Stock prices in London were mixed on Wednesday morning, as data showed that UK grocery price inflation eased in recent weeks; meanwhile Ofgem announced a 13% increase in the price cap for household energy bills in Great Britain from July.

The FTSE 100 index opened down 6.03 points, 0.1%, at 10,485.36. The FTSE 250 was up 151.54 points, 0.7%, at 23,479.03, and the AIM all-share was up 2.86 points, 0.4%, at 815.32.

The Cboe UK 100 was down 0.2% at 1,042.37, the Cboe UK 250 was up 0.5% at 20,344.02, and the Cboe small companies was down 0.1% at 18,792.57.

In European equities on Wednesday, the CAC 40 in Paris was up 0.5%, while the DAX 40 in Frankfurt was 0.7% higher.

Sterling was at $1.3443 on Wednesday morning, unchanged from the London equities close on Tuesday. Against the euro, sterling eased to €1.1543 from €1.1567.

The euro was higher at $1.1640 from $1.1622. Against the yen, the dollar was marginally higher at JP¥159.36 versus JP¥159.33.

UK grocery price inflation eased in recent weeks, to the tamest level since December 2024, offering ‘welcome news’ for consumers.

According to data from Worldpanel by Numerator, annual grocery price inflation in the four weeks to May 17 was 3.1%, easing from 3.8% in the month ended April 19.

‘The easing in the rate of inflation is welcome news for shoppers who have been grappling with warnings of a hike in food prices due to the impact of the war in the Middle East,’ Worldpanel analyst Fraser McKevitt commented.

For the full 12 weeks of the survey to May 17, UK grocery sales rose 2.3% to £36.58 billion from £35.77 billion a year prior.

Tesco sales in the 12 week period rose 3.2% on-year to £10.31 billion, with its market shares growth to 28.2% from 27.9%. It is the market leader. Shares in Tesco were down 0.9%.

J Sainsbury sales rose 3.1% to £5.58 billion, and its share of the market nudged up to 15.2% from 15.1%. J Sainsbury shares fell 0.8%.

Ocado Retail, an Ocado PLC and Marks & Spencer Group PLC joint-venture, was the fastest growing. Sales jumped 10% to £784 million, while its market share inched up to 2.1% from 2.0%. Ocado shares grew 1.2% while Marks & Spencer shares were up 3.2%.

Meanwhile, Ofgem’s price cap is to rise by 13% from July 1 driven by the ongoing conflict in the Middle East, the regulator for Great Britain has said.

The jump will equate to a rise of £18 a month for the average household using both electricity and gas, with households seeing an increase of 24% on their gas bills and 5% on their electricity bills.

The new annual cap is £1,862, up from £1,641 before. This is slightly above Cornwall Insight’s forecast of £1,850.

Ofgem Chief Executive Tim Jarvis said: ‘Today’s price change reflects continued volatility in global energy markets. This means higher wholesale gas prices, driven by ongoing conflict in the Middle East, is impacting the price we pay for energy.’

Shares in British Gas-owner Centrica fell 2.1%, SSE was down 1.3%, National Grid retreated 1.2% and Severn Trent fell 1.1%.

Elsewhere, an Iranian Revolutionary Guards official said that renewed war with the US was unlikely but warned that Iran stood ready against any attack.

‘The possibility of war is low because of the enemy’s weakness, the armed forces are lying in wait with full magazines,’ said Mohammad Akbarzadeh, deputy political chief of the Islamic Revolutionary Guard Corps Navy, was quoted by Tasnim news agency as saying.

Brent oil was trading lower at $97.19 a barrel on Wednesday morning from $100.18 on Tuesday.

In Asia on Wednesday, the Nikkei 225 in Tokyo closed slightly higher. In China, the Shanghai Composite was 1.2% lower, while the Hang Seng Index in Hong Kong fell 1.2%. The S&P/ASX 200 in Sydney gained 0.7%.

In the US on Tuesday, Wall Street ended mixed, with the Dow Jones Industrial Average down 0.2%, the S&P 500 0.6% higher and the Nasdaq Composite gained 1.2%.

The yield on the US 10-year Treasury was quoted at 4.47% on Wednesday, narrowed from 4.51% on Tuesday. The yield on the US 30-year Treasury slimmed to 5.01% from 5.03%.

Back in London, Hollywood Bowl led the FTSE 250 index as its shares jumped 11%.

The bowling operator increased its interim dividend by 10% to 4.52 pence per share from 4.10p, as revenue climbed 9.5% to £141.5 million in the first half from £129.2 million.

The company also launched a £5 million share buyback for the second half of the year.

Hollywood Bowl said sales rose despite ‘ongoing pressure on household budgets’, but asserted that consumers were prioritising ‘experiences and shared social occasions over discretionary retail spend’.

The leisure firm also uses dynamic pricing to adjust prices at peak or off-peak times, which it said was boosting ‘revenue quality’.

The average amount that people spent at a bowling alley, on things like food, drink and additional games, was £12.77 in the UK during the latest period, up 7.6% on the prior year.

Greencore shares fell 7.3% as it swung to a pretax loss despite higher revenue.

The convenience food maker swung to a pretax loss of £33.3 million in the first half from a £26.7 million profit a year prior.

The swing to a loss ‘was driven by the impact of the acquisition of Bakkavor with the recognition of one-off transaction related costs in exceptional items, the amortisation of customer relationship intangibles and higher interest costs arising from the drawdown of the acquisition financing facilities,’ Greencore said.

Greencore sealed the £1.2 billion buy of Bakkavor in January. Bakkavor makes fresh prepared food.

Revenue jumped 43% to £1.32 billion from £922.0 million.

Chief Executive Officer Dalton Philips said: ‘While we continue to monitor macro developments and inflationary impacts from the events in the Middle East, we remain confident in the short-term mitigations we have in place and the outlook for the business. We expect to deliver [financial 2026] adjusted operating profit in line with current market expectations.’

Gold was lower at $4,486.40 an ounce early on Wednesday, down from $4,504.21 late Tuesday.

Still to come on Wednesday’s economic calendar is the Richmond Fed manufacturing index.

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