As it happened: FTSE 100 rises as oil slips; Analysts warn of ‘short-lived’ inflation drop

Good morning and welcome back to the City AM liveblog.

The City has welcomed news of undershooting inflation this morning, but warning signs already suggest it’s a temporary blip.

The Consumer Price Index rose 2.8 per cent in the 12 months to April, that’s under the three per cent pencilled in and a major drop from 3.3 per cent last month.

Economists at the Office for National Statistics pointed to the government’s energy package for helping ease price surge, but this may only be set to push back the inevitable.

“While this respite is clearly welcomed, it will be short lived as the energy price cap is expected to rise nearly 13 per cent in July as higher underlying energy costs, caused by Donald Trump’s decision to again attack Iran, are included in the next calculation,” Lindsay James, investment strategist at Quilter, said.

Markets are also ssessing the latest impact of Donald Trump’s renewed threat to resume military action on Iran, which has left oil prices near $111 a barrel.

The President has said the US was around “an hour away” from military action on Iran but has also doubled down that it could be “two or three days” until this action takes place if a deal is not made.

“A limited period of time, because we can’t let them have a nuclear weapon,” he said.

The war has now entered its 12th week with all transport through the all-important Strait of Hormuz coming to a halt, choking around a fifth of global oil supplies.

Vice President JD Vance gave a media briefing at the White House where the US warned of “option B” if a deal fails to be reached.

He said the US was “locked and loaded,” before adding: “We don’t want to go down that pathway but the president is willing and able to if we have to.”

We’ll be bringing you the latest on this and all the top corporate news of the morning.

Here’s a few of our top headlines this morning

• 8:40am: Consumer demand boosts Harry Potter publisher
• 8:10am: Bank of England will not need to ‘aggressively hike interest rates’
• 7:25am: M&S profit slumps in fallout from cyber attack
• 7:20am: Goldman Sachs lands lead role on SpaceX IPO
• 7:00am: Inflation undershoots expectations after Labour subsidies