Sharecast - The FTSE 100 was down 0.3% at 7,887.40.
Figures released earlier by the Office for National Statistics showed that consumer price inflation was 10.1% in the year to March, down from February’s surprise 10.4%. Economists were expecting a fall to 9.8%.
On a monthly basis, CPI rose by 0.8%, compared to a rise of 1.1% in March.
The largest downward contributions came from motor fuels and heating oil prices, but soaring food prices weighed heavily. Food inflation hit a fresh 45-year high of 19.2% in March, from February’s 18.2%.
Once more volatile energy, food, alcohol and tobacco prices were stripped out, core CPI including owner occupiers’ housing costs (CPIH) rose by 5.7% in the 12 months to March, unchanged on February. Core CPI was 6.2%, above forecasts for 6.0%.
Russ Mould, investment director at AJ Bell, said: "Stubbornly high inflation soured the mood on Wednesday with the FTSE 100 dipping back after a strong run since late March.
"News that UK CPI remains in double-digits will only strengthen the argument for the Bank of England to keep pushing up interest rates. Bond yields moved higher, while property and utility stocks eased back."
In equity markets, Redde Northgate surged after the commercial vehicle rental provider said full-year adjusted pre-tax profit was likely to be ahead of market consensus and around the top end of the consensus range following a continued strong performance across the business.
Hunting (LON:HTG) was also trading up after saying it had seen a strong start to the year, with first-quarter earnings coming in ahead of expectations.
National Express (LON:NEX) gained after the transport operator reported a rise in first-quarter revenues driven by an improvement in UK buses and German rail.
Kainos (LON:KNOS) fell even as it said results for the year ended 31 March were set to be in line with current consensus forecasts.
Liontrust (LON:LIO) was also down despite saying that annual profits were on course to come in ahead of expectations.
Just Eat Takeaway (LON:JETJ) slumped as it lifted its guidance for full-year core profit but posted a decline in first-quarter orders.
