CPI inflation in the UK slowed to 2.6% y/y in March, down from 2.8% in February, while prices were up 0.3% m/m. Both measures were lower than predicted, with the annual measure beating the consensus estimate of 2.7%. Core inflation remained somewhat stickier at 3.4%, in line with expectations but down from 3.5% previously but there was a sharper slowdown in services inflation which fell to 4.7%, down from 5.0% the previous month and lower than the expected 4.8%. Cheaper computer games and lower fuel costs helped drive the slowdown, though incoming higher utilities bills from April will likely stall and reverse the slowdown in price growth over the coming months.
US retail sales surprised to the upside in March as they grew 0.5% m/m, beating the predicted 0.4%, while February’s print was revised up to 0.7%, from 0.3% previously. Stripping out volatile automotives and gas, growth was a robust 0.8% m/m, matching the upwardly revised pace from February. The stronger than expected upswing in purchases appears to suggest that consumers were seeking to get ahead of any tariff-induced price rises that were anticipated in April. Industrial production meanwhile dropped 0.3% m/m after February’s 0.8% gain, worse than the predicted 0.2% fall. Manufacturing production was up 0.3% m/m.
The Bank of Canada opted to keep its benchmark interest rate on hold at 2.75% yesterday, despite the lower than expected inflation print released the previous day. Governor Tiff Macklem explained the decision as proceeding ‘carefully’ in the face of potential upwards pressure on prices from the US government’s tariffs policies.
Fed Chair Jerome Powell pushed back against hopes of imminent market-supporting cuts from the Fed yesterday, telling the Economic Club of Chicago yesterday that the fed’s ‘obligation is to keep longer-term inflation expectations well anchored’.
Today’s Economic Data and Events
15:00 Turkey one week repo rate, %. Forecast: 42.5%
16:15 Eurozone ECB deposit facility rate, %. Forecast: 2.25%
16:30 US initial jobless claims, week to April 12. Forecast: 225,000
Egypt overnight deposit rate, %. Forecast: 25.9%
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