The FTSE 100 moved higher this morning amid growing expectations for a leap in interest rates as UK inflation soared to a new 40-year peak. 

The blue-chip index gained 0.6%, or 43 points, at 7,339 after the Office for National Statistics (ONS) reported the cost of goods and services had jumped by 9.4% in the 12 months to June, the highest figure since February 1982, and up from 9.1% in May.

The soaring cost of energy and food have kept UK inflation at the highest level among all G7 nations, prompting expectations for further swift interest rate rises from the Bank of England. Sterling held its ground to trade at $1.1998 against the dollar, but analysts said that was more a case of a softer greenback than a stronger pound. 

Neil Wilson, analyst at Markets.com, said it was ‘no wonder the [Bank of England] governor Andrew Bailey (pictured above) was yesterday chirruping about a 50 basis point hike at the next meeting’.

‘With energy prices to rise again in the autumn, the [inflation] peak has not been reached yet,’ he said, adding there was a growing sense policymakers have been ‘too slow to react and too complacent about inflation’.

The biggest winner among blue chips was advertising giant WPP (WPP), which rose 3.2%, or 27p, at 862p, pulled higher by American rival Omnicon reporting a strong set of second quarter results. Ocado (OCDO) also clawed back some of yesterday’s losses, up 3.1%, or 23p, at 778p, despite concerns about inflation hitting both consumer spending and costs at the grocery delivery platform.

The main index was also helped by reports Russia will resume gas exports to Europe via its Nord Stream 1 pipeline, which carries a third of Russia’s gas exports to the EU and had been closed for maintenance. BP (BP) traded 1.3% ahead to 390p and Shell (SHEL) was up 0.6% at £20.47.

The FTSE 250 pushed 0.4%, or 77 points, higher to 19,359, with Aston Martin Lagonda (AML) leading the mid-cap index. The luxury car maker has had a rollercoaster week, adding 30% on Monday before giving back nearly half of those gains yesterday. Today, the shares motored 7.9%, or 41p higher, at 560p.

Medical products company Convatec (CTEC) added 3% to trade at 226p on the back of an analyst target price upgrade while 4imprint (FOUR) extended its rally into a second day, up 2.9% at £29.85, following an announcement that full year profit at the promotional products printer will beat expectations.

Royal Mail (RMG) weighed on mid caps with a 5.2%, or 14p, decline to 270p after a first quarter revenue drop of 11.5%. The group also threatened a split after a name change to International Distributions Services. Management said there could be a separation should its core division see no ‘significant change’.

In investment trust news, Scottish Mortgage (SMT ) jumped 2.9% to 823p following a US rally overnight. That also lifted US-biased Edinburgh Worldwide (EWI ), which added 2.6% to change hands at 188p, while stablemate Baillie Gifford Japan (BGFD ) climbed 2.5% to 736p.