BoE To Scrutinise UK GDP And Retail Sales Reports



The UK GDP report as well as retail sales reports coming from the UK and the US will be in the spotlight of investors and traders for the rest of this week.

UK’s CPI inflation remained unchanged in January coming in at 4.0% on a year-to-year basis. Core CPI fell to 5.1% with S&P Global Ratings saying that “a tight labour supply is sustaining high wage growth and thus underlying inflationary pressures, especially in services.”

In the US, CPI inflation came in higher than expected, reaching 3.1% in January on an annualised basis, according to the US Bureau of Labour Statistics (BLS). Market analysts said that the CPI inflation figure got a boost by shelter prices that comprise about one-third of the index.

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UK GDP December 2023

On Friday, the Office for National Statistics (ONS) will release December’s GDP growth report. Market analysts forecast the growth rate to come in at –0.2% on a monthly basis, decelerating from the 0.3% figure recorded in November last year.

The survey will include preliminary data regarding the fourth quarter’s GDP figure which is likely to come in at 0.1%, falling from 0.3% recorded in Q3 2023. The UK’s economy came to the brink of recession last year as high interest rates and inflation figures hurt productivity.

The National Institute of Economic and Social Research (NIESR) said in a note that “the overall picture of flatlining output in the United Kingdom, which we have seen now for almost two years, continues.” NIESR was more upbeat about 2024 and predicted the economy would expand by 0.9% this year while it suggested that inflation would fall to 1.5% by April as a result of sliding energy prices.

US Retail Sales January 2024

The US Census Bureau will publish its Retail Sales report for the month of January on Thursday. As retail sales reports show how consumers react to price fluctuations, they serve as a source of information taken into consideration by the Federal Reserve.

Economists forecast retail sales to have dropped by 0.1% on a monthly basis. A survey by the Consumer News and Business Channel/National Retail Federation (NRF) Retail Monitor said that retail sales grew by 2.4% on an annualised basis in January, but stressed that a fall of 0.16% was recorded as the year started.

UK Retail Sales January 2024

One more important data release coming from the UK will be January’s Retail Sales report which is forecast to show a 1.5% increase on a monthly level, but also a 1.2% decrease when compared on an annualised basis. As the UK economy struggles, retail sales have been subject to fluctuations as consumers put in an effort to cover their needs.

The value of retail sales rose by an annual rate of 1.2% in January, the British Retail Consortium (BRC) said on Tuesday. “Weak consumer demand led retail sales growth to slow. While the January sales helped to boost spending in the first two weeks, this did not sustain throughout the month,” was noted in the report.

OPEC: Oil Demand Isn’t Dropping

Saudi Arabia’s decision to reduce oil capacity expansion plans has generated some jitters over the future of the oil producing industry. OPEC’s general secretary, Haitham Al Ghais, scrambled to assure investors that this won’t be the case noting that “first of all I want to be clear I cannot comment on a Saudi decision … but this is in no way to be misconstrued as a view that demand is falling.”

Two weeks ago, Saudi state oil company Aramco  announced its decision to lower its target for maximum sustained production capacity to 12 million barrels per day (bpd), 1 million bpd below a target announced in 2020 and set to be reached in 2027. Reuters sources suggested that the move was discussed for at least six months and was the result of excessive oil production not monetised as it should.

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