FTSE 100 down 0.2
UK August CPI at 2.2
Reckitt Benckiser up after report of homecare asset sale discussions

Sept 18 Reuters British stock indexes retreated on Wednesday, following a broadly in line inflation report and as investors awaited a highly anticipated yet uncertain Federal Reserve policy decision later in the day.

At 0707 GMT, both the bluechip FTSE 100 and an index of midcap stocks were down 0.2. Both the indexes had closed at their highest since early September on Tuesday.

UK annual consumer price inflation stood at 2.2 in August, unchanged from July as forecast, data showed. However, services inflation a figure closely watched by the Bank of England rose to 5.6, slightly more than forecast.

The British pound touched a session high against the dollar following the inflation data, pressuring the FTSE 10039;s exportfocused companies.

The data points to stillpersistent inflationary pressures, with traders further trimming bets on the BoE cutting rates at its Thursday meeting, where policymakers are expected to keep rates on hold.

Today39;s inflation figures may at least give the MPC39;s hawks some pause for thought, while also evidencing that the Bank39;s continued caution, and focus on signs of underlying inflation persistence, is indeed warranted, said Michael Brown, senior research strategist at Pepperstone.

Globally, investors remain focussed on the Federal Reserve, which is expected to ease policy later in the day though the size of the rate cut…