Week Ahead

April 8th - April 12th

US CPI (Wed):

The consensus view is for headline CPI to rise +0.3% M/M in March (vs +0.4% in February), while the core rate of CPI is expected to rise +0.3% M/M (prev. +0.4%). "The March CPI report will be a key indication of whether the pickup in inflation at the start of 2024 was a function of early-year noise or if inflation's journey back to the Fed's target has been drawn out materially," Wells Fargo said, "we believe it will show hints of both dynamics at play." Wells is above consensus in looking for CPI to rise at a rate of 0.4% for a second straight month, and it says that would push the annual rate up to a six-month high of 3.5% (vs 3.2% in February). Wells is in line with the consensus on the core reading and says that while it will be a tick softer than in January and February, it is essentially similar to the pace averaged in Q4, "a sign that underlying progress remains stubbornly slow."

UK GDP (Fri):

Expectations are for M/M GDP in February to expand by 0.1% vs. the 0.2% increase seen in the prior month. As a reminder, growth in March was bolstered by "a strong rebound in retail activity after an unexpectedly weak Christmas trading period", according to ING. Subsequently, the release supported calls that the UK economy is set to recover from its H2 recession endured last year. For the upcoming release, analysts at Investec suggest that services output likely increased by 0.1% with the services PMI metric holding above 50, whilst in the manufacturing sector, growth was likely supported by another "good month" for the car industry. For industrial production as a whole, the desk suggests that growth was likely flat, whilst construction was likely held back by adverse weather conditions. Putting this together, Investec is in line with the consensus for a 0.1% M/M expansion. Looking beyond the upcoming release, Investec expects a 0.3% Q/Q outturn for Q1. From a policy perspective, (volatile) M/M growth releases will likely continue to play second fiddle to the MPC's focus on services inflation and real wage growth.