- UK Inflation set to continue higher
- Collapse in UK retail sales to underline cost of living squeeze
- PMI readings likely to be flattered by rising inflation
Monday 21st March
German Producer Price Inflation (PPI) for February kicks the week off. Markets are already braced for a sharp increase here and even if this does come in a little under the annualised forecast of 26%, erratic movements in fuel prices suggest that the March print is unlikely to be any better. Even a shortfall therefore seems unlikely to offer policymakers at the ECB much to cheer.
Tuesday 22nd March
On Tuesday, the CBI Industrial Trends Orders reading for March will give some insight as to how the ongoing war in Ukraine and rising fuel prices is impacting businesses in the UK. A comparatively marked decline seems inevitable here and even if we do see a relatively quick resolution to what’s happening in Ukraine, sustained high energy prices plus the idea that global supply chains will start to creak again with China’s ongoing COVID problems means that even a print in the low-teens this month is likely to simply be one step in what could be a protracted decline back into negative territory.
Wednesday 23rd March
UK Inflation data will be front of mind on Wednesday morning with February’s print scheduled. This could break above 6% on an annualised basis, whilst the month-on-month reading may exceed 1%. There’s more to come here and the Bank of England’s modest tinkering with monetary policy will do little to apply much downward pressure. 8% is being forecast by April, exacerbating the cost of living crisis and having the potential to keep a lid on any further attempts at progress from UK equities.
Thursday 24th March
On Thursday we have the Flash PMI data for March being reported from the UK, US and Eurozone. High numbers here go hand in hand with high inflation, so this probably need to be taken into account. All the metrics are set to come in comfortably above the break even 50 mark, although it also seems likely that most of the readings will show a modest month-on-month decline. That is likely to become a cause for concern, especially if the rate of decay increases against that backdrop of rising inflation.
Friday 25th March
On Friday, UK Retail Sales data for February will be issued. Consumers are well aware of the cost of living squeeze although this number will cover a period from before that big spike in fuel prices. With that in mind there’s a sharp reduction being forecast in the year on year print – dropping from 9.1% in January to less than half that – and this sets a bad precedent for the coming months, too. It also needs to be taken into account that these prints aren’t adjusted for inflation. This is likely to be one of the first prints to confirm the scale of the incoming economic pain.
Rounding out the week we have the German Ifo Business Climate data for March. After rising steadily since the end of last year, this print is going to carry both the weight of uncertainty over the situation to the country’s East as well as those spiralling input costs. Forecasts suggest that after the five month high of 98.9 posted in February, this number could crash below December’s 94.8.
