FTSE 100 Rises Amid Inflation Ease and Sector Gains

The UK's FTSE 100 and FTSE 250 indices rose on Wednesday as inflation figures came in below expectations. This offers hope ahead of Finance Minister Rachel Reeves' budget update. Sterling weakened slightly, and energy prices may soon drive inflation up. Reeves is expected to announce spending cuts.

The UK's FTSE 100 index showed modest gains on Wednesday after inflation data defied expectations by coming in lower than anticipated. Investors took solace in the news ahead of Finance Minister Rachel Reeves' budget update set for later in the day.

By 1017 GMT, the FTSE 100 had increased by 0.1%, with the midcap FTSE 250 index following suit, climbing by 0.5%. February witnessed a steeper-than-expected drop in British inflation, granting consumers temporary relief before the anticipated resurgence in price growth, as well as providing Reeves with some breathing space before her budget speech at 1230 GMT.

Although the inflation data led to a slight weakening of the sterling, economists caution that rising energy prices could soon reverse this trend. In response, Reeves is projected to announce cuts to her spending plans to soothe investor concerns about fiscal responsibility. Meanwhile, the energy sector continues to rally, with Ithaca Energy leading gains after restructuring announcements.

(With inputs from agencies.)