Rising inflation spooked markets on Wednesday as the London Stock Exchange’s leading index cooled.

The FTSE-100 closed the day down 33.53 points, or 0.47%, at 7091.19 as annual inflation of 2.5% in June along with more jitters around England’s ending of restrictions left investors nervous.

CMC Markets analyst Michael Hewson explained yesterday: “It’s been another mixed session for markets in Europe today, with the FTSE-100 underperforming once again, as a fresh set of inflation figures generates further concern about the ‘transitory’ narrative, so beloved of central bankers. Concerns about inflation, transitory or otherwise, have continued to dominate sentiment today, as worries over the pace and persistence of rising prices temper optimism over the wider global recovery story. Markets in Europe have undergone a broadly underwhelming session in contrast to US markets which continue to set new records.”

In France, the CAC-40 closed down 0.09% and the German DAX 30 was off by 0.66%.

The pound was down 0.1% against the greenback at $1.386 and down 0.2% against the single currency at €1.171.

The dollar strengthened following announcements from the US Fed chief, Jerome Powell, who suggested inflation in the States is likely to only be temporary.

In company news, housebuilder Barratt Developments revealed a further £30 million hit for remedial works over cladding on its buildings in the wake of the Grenfell Tower disaster, taking its total annual bill to more than £80 million.

But the company added underlying pre-tax profits will be slightly ahead of expectations, sending shares up 2%, or 14.2p, to 711p.

Coronavirus vaccine maker AstraZeneca was given the all-clear by the UK competition watchdog, the Competition and Markets Authority, to go ahead with its $39 billion megadeal to buy US drug company Alexion Pharmaceuticals. But investors appeared less impressed with the news, with AstraZeneca shares closing down 90p at 8,669p.

Homeware retailer Dunelm hailed a “strong” jump in sales for the past three months on the back of pent-up demand from shoppers returning to stores.

But investors appeared to be cashing out on the recent high share price at the firm, with shares closing the day down 90p, or 6.3%, at 1,349p.

The boss of Upper Crust owner SSP Group, Simon Smith, said he will be stepping down at the end of the year after less than two years with the group – primarily during its toughest time as airports and transport hubs remained closed or deserted. Shares closed down 11.3p at 253.1p.

Online fashion firm Boohoo agreed a deal to sell its brands in franchised Debenhams stores and online across the Middle East with Alshaya Group. Shares closed up 1.3p at 292.7p.

And bread and cake supplier Finsbury Foods said sales have rebounded over the past year, although they remain slightly below pre-pandemic levels. Shares closed up 1p at 92p.