If inflation has peaked, these are the FTSE 100 stocks I’ll snap up

Earlier this week, data showed that in December, inflation fell to 10.5% from the previous month. Next, November’s reading was 10.7% lower than 11.1% from October. This is starting to give the impression that inflation in the UK may be peaking. If I keep getting any indication that this is happening over the next month or so, this is it FTSE 100 stocks that I think can beat the market in 2023.

Reduce pressure on grocery prices

The obvious groups that will benefit are supermarkets and grocery retailers. Last year, trading updates disappointed investors as companies said consumers were buying less due to higher food and beverage costs. For example, Ocado recorded a 13% decrease in the average wholesale basket value compared to the same period in 2021. On average, customers have 48 items in their basket, instead of 55 in H1 2021.

The share price of many in this sector fell last year as investors considered lower profits. But if inflation continues to fall, we should see a correlation with rising stock prices for retailers in the region. Not only can supermarkets return to normal profit margins, but shoppers will also be more confident in buying more if prices are under control.

I think this is one reason why some stocks have started to move higher recently. Tesco shares rose 10% in just the past month, with J Sainsbury also got 9.3%.

Help for property prices

Another area that could benefit from lower inflation is property. For a specific FTSE 100 idea, I think Move right and English land.

High inflation has forced the Bank of England to raise interest rates quickly. This has put pressure on the mortgage market, with high rates keeping many people from buying a home. In turn, this is one of the factors that reduce property prices.

If inflation falls lower, the situation should be reversed. Interest rates should not be higher. If anything, the forecast could indicate some rate cuts in the coming years. For fixed rate mortgage deals, this may mean more attractive and lower rates. If this allows others to get on the property ladder, it is good news for property-related companies.

Rightmove should see higher website activity and more listings from estate agents. British Land should see a move higher in its portfolio value.

Monitor FTSE 100 stocks

One risk is that inflation could fall, but quickly. If it moves down only 0.2% per month, it will take a long time before it goes down at a reasonable level. So if it still exceeds 10% in a few months, it can block the progress of the stock above.

That’s why I’m putting the above idea on my watch list, but I’ll wait and see how it goes in February. If inflation appears to be coming down quickly, I will add stocks to my portfolio.