The Week Ahead: What will the new inflation figures show?

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This week we’ll see inflation data coming though which could indicate a rising path, as economists are predicting. CPI is expected to increase to 2.1 per cent in February, which would be the highest level since November 2013.

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

Monday 20 March

  • Bank of England – capital issuance
  • Eurogroup Finance Ministers – meeting

Tuesday 21 March

  • Monthly Industrial Trends Survey – Confederation of British Industry
  • Public Sector Finances, February 2017 – ONS
  • UK producer price inflation, February 2017 – ONS
  • UK House Price Index, January 2017 – ONS
  • UK consumer price inflation: February 2017 – Office for National Statistics

IHS Markit chief UK and European economist Howard Archer says: “Inflation is expected to have been lifted in February by significantly increased food prices and also by a rise in core inflation as the sharply weakened pound increasingly feeds through to affect prices for an increasing number of goods and services. Significantly, the British Retail Consortium has reported that the year-on-year fall in its shop price deflator narrowed markedly to 1 per cent in February from 1.7 per cent in January.

“In particular, food prices rose 0.4 per cent year-on-year in February, which was the first increase since April 2016 and in marked contrast to a fall of 0.8 per cent year-on-year in January. Meanwhile, the year-on-year fall in non-food prices slowed appreciably to 1.8 per cent in February from 2.3 per cent in January. The BRC observed that “it is clear that the significant underlying cost pressures, which have been building over the last year are beginning to filter through into shop prices.”

Wednesday 22 March

  • European Central Bank non-monetary policy meeting
  • UK Financial Policy Committee – meeting

Thursday 23 March

  • Retail Sales in Great Britain: February 2017 – Office for National Statistics (ONS)
  • Next (Q4 results)

The Share Centre investment research analyst Graham Spooner says: “The market will be hoping for better news from clothing retailer Next following its fourth quarter trading update in early January which showed Christmas sales at high street stores below expectations and an 8 per cent lowering of 2018 profit guidance at the midpoint of the £680m-£780m range given.

“Profits for the current year are expected to be £792m, towards the bottom of the range previously given. A major issue for the group is the increase in import costs due to the weak pound and investors are keen to see if that is going to be passed on to customers or absorbed by the company. Any further news on plans for four special dividends, amounting to 180p, during 2017 will also be of interest.”

Friday 24 March

  • Smiths Group (Q2 results)

Spooner says: “The group’s shares have performed exceptionally well over a one year period reflecting a steady performance from its growth businesses which have been offsetting the tougher conditions faced by its oil services business, John Crane. Investors will be expecting the divisions that are exposed to government spending such as the Medical and Detection to do better as certain governments look to increase spending after some lean years.

“Meanwhile its Flex-Tek business which is exposed to the US housing construction market is expected to continue to do well. The Interconnect business could continue to face challenging conditions while investors may still focus on the group’s pension deficit.”