# UK midcaps slip as inflation hits 3-decade high; Tesco slides
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-04-13
Category: FINANCE
Category URL: https://financedigest.com/category/finance
Meta Title: UK midcaps slip as inflation hits three-decade high
Meta Description: UK midcaps dip on rising inflation, impacting Tesco profits and consumer spending. FTSE 250 down 10.7% YTD amid economic uncertainty.
URL: https://financedigest.com/uk-midcaps-slip-as-inflation-hits-3-decade-high-tesco-slideshtml

By Devik Jain

(Reuters) -UK midcaps slipped on Wednesday after data showed annual inflation last month rose to a three-decade high, intensifying a cost-of-living squeeze faced by households and hit to the profits of supermarket companies like Tesco.

The domestically focused FTSE 250 index ended 0.1% lower, extending its year-to-date loss to 10.7% on concerns about the economic outlook due to surging price pressures.

Britain’s consumer price inflation (CPI) leapt to 7% in March, sharper than a forecast 6.7% increase, and ramping up doubts about how aggressive the [Bank of England](https://www.financedigest.com/bank-of-england-still-needs-to-see-the-job-through-on-inflation-pill.html "Bank of England still needs to ‘see the job through’ on inflation: Pill") will move to tighten its monetary policy.

Core CPI, which excludes food, energy, alcohol and tobacco prices, rose to 5.7% [last month](https://www.financedigest.com/monkeypox-emergency-could-last-months-with-window-closing-to-stop-spread-experts-say.html "Monkeypox emergency could last months, with window closing to stop spread, experts say") from 5.2% in February.

“Inflation is now everywhere. [Price rises](https://www.financedigest.com/renault-revenues-rise-30-in-q1-on-higher-sales-and-prices.html "Renault revenues rise 30% in Q1 on higher sales and prices") are broad-based and gaining momentum … this, we think, will shift the conversation away from March’s more dovish [policy message,” Deutsche Bank](https://www.financedigest.com/what-to-make-of-the-headlines-brexit-and-bank-of-england-policy-eba-bank-stress-tests.html "What to make of the headlines? Brexit and Bank of England policy, EBA bank stress tests") senior economist Sanjay Raja said in a note.

The intensifying [cost of living crisis](https://www.financedigest.com/indefensible-uks-sunak-under-fire-over-response-to-cost-of-living-crisis.html "‘Indefensible’: UK’s Sunak under fire over response to cost of living crisis") will only add to the UK’s recession risks, something we think the MPC (monetary policy committee) will be carefully watching as we move into Q2-2022.

Tesco fell 2% to weigh the most on the FTSE 100 after [Britain’s biggest retailer warned of a drop in profits this financial year](https://www.financedigest.com/2043-the-year-britain-will-turn-cashless.html "2043: The year Britain will turn cashless") due to the tough economic conditions and pressure on consumers alike.

[Shares of rivals Sainsbury’s](https://www.financedigest.com/shares-in-uk-chain-sainsburys-jump-11-on-report-of-buyout-interest.html "Shares in UK chain Sainsbury’s jump 11% on report of buyout interest"), Marks and Spencer and Ocado Group slipped between 2.1% and 2.6%.

The FTSE 100 inched up 0.1%, with [oil major Shell](https://www.financedigest.com/shell-chevron-and-petrobras-weigh-guyana-oil-auction-bids-sources.html "Shell, Chevron and Petrobras weigh Guyana oil auction bids -sources") and miners Glencore and Anglo American rising between 0.7% and 1.2%.

A [jump in sterling in the wake of inflation data](https://www.financedigest.com/oil-jumps-on-lower-than-expected-us-inflation-data.html "Oil jumps on lower-than-expected US inflation data") also capped gains on the blue-chip index, which houses large dollar earning companies like Diageo. \[GBP/\]

[British Airways](https://www.financedigest.com/british-airways-not-currently-using-afghanistan-airspace.html "British Airways not currently using Afghanistan airspace") parent IAG rose 3.8% to top the FTSE 100 index. Its U.S. peer Delta Air Lines said robust consumer demand not only helped it post a “solid” profit in the month of March, but is also allowing the carrier to offset [soaring fuel costs](https://www.financedigest.com/amazon-other-retailers-revamp-free-shipping-as-costs-soar.html "Amazon, other retailers revamp ‘free’ shipping as costs soar") with higher fares.

(Reporting by Devik Jain in Bengaluru; editing by Uttaresh.V, Subhranshu Sahu, William Maclean)


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