Higher-than-expected inflation numbers on both sides of the Atlantic saw the FTSE 100 drop sharply at the open this morning.
The flagship index was down 0.59 per cent after half an hour of trading.
Official figures released this morning revealed UK inflation hit 2.5 per cent in June, with analysts expecting that to increase.
US inflation is also at a decade-long high, according to new figures released yesterday afternoon.
‘’The creeping UK headline inflation rate is likely add to the sense of unease pervading the financial markets about the impact higher prices will have on economies around the world,” said Susannah Streeter, Senior Markets Analyst at Hargreaves Lansdown.
Read more: UK inflation hits 2.5 per cent in June
Winners and losers
Despite the looming spectre of inflation, banks continued to do well with Natwest and Lloyds both up significantly in early trading, driven by an assumption that consumer spending will continue and off the back of banks being given the OK to dish out dividends again.
Experian, Just Eat and Rolls-Royce fell.
The FTSE 250 was also down 0.45 per cent in early trading.