Persimmon Shares Rise Nearly 4% as UK CPI Eases Rate Fears

Persimmon (LON: PSN), the York-based housebuilder behind the Persimmon Homes, Charles Church and Westbury Partnerships brands, saw its shares jump nearly 4% in today’s session, with no company-specific news behind the move.

The stock traded up 4.10% to 1,143.5p, from yesterday’s close of 1,098.5p, having touched a day high of 1,146.5p. That extends a gain of 1.34% in yesterday’s session and puts the shares below the stock’s 200-day average of roughly 1,203.35p, within a 52-week range of 947.40p to 1,496.52p.

Official figures released earlier today showed UK headline inflation rose to a five-month high of 3.1% in August, up from 2.9% in July, driven by fuel and airfare costs and in line with consensus forecasts. Crucially, core inflation, which strips out volatile items such as food and fuel, held flat at 2.6%, while services inflation, watched by the Bank of England as a gauge of underlying wage pressure, was unchanged at 3.4%.

With those closely watched measures showing no fresh acceleration, markets were pricing roughly a one-in-five chance of a rate hike at the Bank’s meeting tomorrow, easing fears of higher mortgage rates that weigh directly on housebuilder demand. That mechanism appears to be behind the rally in rate-sensitive stocks such as Persimmon, though no source has tied the move explicitly to Persimmon itself, and the gain is a sector-wide read-across from the data rather than a company catalyst.

Charlotte O’Leary, associate economist at the National Institute of Economic and Social Research, said the inflation data supported a hold.

With limited evidence of second-round effects so far, we expect the MPC to hold rates tomorrow.

Charlotte O’Leary, National Institute of Economic and Social Research

The move remains contingent on the Bank’s decision tomorrow: a hawkish surprise from the Monetary Policy Committee, the Bank of England’s rate-setting body, could quickly reverse today’s gains across the housebuilding sector.