CPI data for March due at 0830GMT, along with retail sales (March also)
Inflation:
Barclays:
- In March, we expect headline CPI inflation to remain at 2.7% (CPIH: 2.5%), supported by an 0.1pp increase in core inflation to 2.5%. As for RPI, we also look for an unchanged inflation print of 3.6% (index: 278.9).
Nomura:
- While we forecast an unchanged CPI inflation reading of 2.7% in March, we think there are, if anything, downside risks to this view. We also expect RPI inflation to remain at 3.6%, implying a constant wedge between RPI and CPI inflation of around 0.9pp.
- Lower petrol prices are offset elsewhere in our headline CPI forecast, with the result that core CPI inflation could rise modestly in March.
- Both the CBI and PMI surveys of output price inflation showed some signs of slowing in March, though the balances remain at high levels. We think this is consistent with a 0.2% m-o- m rise in core prices.
- We forecast flat headline prices thanks to a decline in petrol prices. Few changes in commodity prices or the currency in March suggest around a flat reading on input prices.
Retail Sales:
Barclays:
- Barclaycard data indicate significant weakness in weather sensitive areas such as spending at garden centres and DIY stores, signaling that March retail sales might be negatively impacted by the storms.
Nomura:
- There is more than the usual uncertainty associated with the March sales print.
- On the positive side, the BRC reported a rise in sales growth during the month. However, much of that could be due to the early timing of Easter (which is not adjusted for by the BRC, but is by the ONS).
- The CBI reported the sales balance was far more downbeat (it turned negative in March) and we expect the dominant factor in the official data will be the negative effect on footfall of the cold weather and snow. As a result, we forecast a decline in official sales in March.
