The Week Ahead: How sharply is UK inflation rising?

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This week we’ll have fresh inflation data which will indicate if the path for inflation is on the rise as the Bank of England has predicted.

Fund Strategy looks at some key events shaping the week and what to expect.

Monday 13 February

  • Reckitt Benckiser (Q4 results)

The Share Centre investment research analyst Graham Spooner says:”Investors will be hoping that the problems in some emerging markets in 2016 notably Russia and Korea are now over. There may be more comment on its recent acquisition of baby-food maker Mead Johnson, which some analysts feel was fully priced.

“Other areas to focus on will be cost controls as well as the performance of new products and their effect on profits and margins. Also worth noting are the sales in the US and China, which are the group’s two largest revenue sources.”

Tuesday 14 February

  • UK consumer price inflation: January 2017 – Office for National Statistics

Spooner says: “In December, UK Inflation rose sharply to 1.6 per cent, but there is a good chance it increased even higher than this in January. Month on month inflation in January 2016 was minus 0.8 per cent.

“When this data falls out of the equation that defines the annual inflation rate, to be replaced with month on month inflation data for January 2017, even if prices were flat last month, the annual rate will pass 2 per cent. Inflation may well hit its highest level since 2013.”

  • Rolls-Royce (Q4 results)

Spooner says:”The newsflow surrounding Rolls Royce in recent months has been dominated around the bribery scandal, although the full year results will be an opportunity for the focus to return to the company’s operations. However, all isn’t rosy as the market believes that sales for the year will be down slightly as sales of new engines have cannibalised older models.

“Furthermore, sales of regional jets have weakened while the marine division feels the impact of lower oil prices. Group profits will also hurt by FX hedges that have gone wrong because of Brexit. Nevertheless, it’s the forward looking statement on potential new contracts, progress on group restructuring and lowering costs that will be more important.”

Wednesday 15 February

  • US Consumer Price Index, January – Bureau of Labor Statistics
  • UK productivity flash estimate: October to December 2016 – Office for National Statistics
  • UK labour market statistics: February 2017 – Office for National Statistics

Thursday 16 February

  • Coca-Cola (Final results)

Spooner says:”There have been some encouraging signs in European markets and emerging markets such as Nigeria for the soft drinks bottling group. This is in spite of the last trading update in November which showed a 1 per cent fall in overall volumes in the third quarter and a 1.9 per cent decline in revenue.

“The group said previously that it was expecting to see good growth for the current year and has set a longer term target of 4.5 per cent average annual revenue growth.”

Friday 17 February

  • Retail Sales in Great Britain: Jan 2017 – Office for National Statistics