LONDON: British shares fell on Wednesday as inflation picked up by a little more than expected in January, while British American Tobacco slumped despite stronger annual profit.

The commodity-heavy FTSE 100 was down 0.5% by 0916 GMT, with British American Tobacco the biggest drag.

UK inflation rose a little more than expected last month as the country went back into a coronavirus lockdown, pushed up by higher food prices and less discounting of household goods such as sofas, official data showed.

“The fact that restaurants and hotels provided a large upward pressure on CPI, despite largely being shuttered in January, provides ample cause for caution when interpreting broad economic indicators in a world where activity has been so horribly distorted by lockdown,” said Laith Khalaf, financial analyst at AJ Bell.

The FTSE 100 has recovered nearly 35% from its March 2020 lows and is now 12% below its peak last year, led by stimulus support, but a surge in infections and lockdowns have recently slowed the pace of gains.

The mid-cap FTSE 250 index fell 0.6%.

In company news, British investment platform Hargreaves Lansdown slid 7.2% to the bottom of the blue-chip index after Peter Hargreaves, the largest shareholder and co-founder, sold $416 million worth of shares.

Miner Rio Tinto rose 3.2% after reporting its best annual earnings since 2011 and declaring a record dividend payout.

Signature Aviation fell 0.6% after agreeing to sell its engine repairs business to US-based StandardAero for $230 million.—Reuters