Will CPI Next Week Keep Fed On Course?

Wednesday, 12 February 2025, 15:30

US CPI (YoY) (Jan)

The U.S. Consumer Price Index (CPI) rose 2.9% year-over-year in December, in line with market expectation and up from 2.7% in November. The uptick in number was driven by higher energy and food prices. Gasoline surged 4.4% due to supply constraints, while food costs rose amid supply chain disruptions and weather impacts. Airline fares and vehicle prices also contributed, reflecting strong consumer demand. Despite the Federal Reserves tightening, inflation remains sticky, and with potential tariff changes ahead, the upcoming release could edge closer to 3%.

Thursday, 13 February 2025, 15:00

UK GDP (YoY) (Q4)

As of the third quarter of 2024, the United Kingdom's Gross Domestic Product (GDP) increased by 0.9% year-over-year, a slight revision from the preliminary estimate of 1.0%. This modest growth was primarily driven by household spending, which rose by 1.5%, and gross fixed capital formation, which saw a 3.9% increase, including a notable 5.8% rise in business investment. However, government expenditure grew by only 0.8%, less than initially anticipated. The services sector experienced minimal growth at 0.1%, the construction sector expanded by 0.8%, while the production sector contracted by 0.2%. Looking ahead, the International Monetary Fund (IMF) has adjusted its forecast for UK GDP growth in 2025 from 1.5% to 1.6%. However, the Bank of England is expected to lower its 2025 growth forecast from 1.5% to approximately 1%, reflecting concerns over economic stagnation. Given these mixed signals, it is anticipated that the UK's GDP growth may remain subdued in the near term, with potential for slight improvement depending on domestic and global economic developments.

Thursday, 13 February 2025, 09:00

German CPI (MoM) (Jan)

In January 2025, Germany's Consumer Price Index (CPI) decreased by 0.2% compared to December 2024, marking a reversal from the 0.5% increase observed in the previous month. This decline was primarily driven by a moderation in energy prices, which had been a significant contributor to inflation in previous months. Additionally, the services sector, including areas like insurance and public transportation, saw price increases that were less pronounced than in previous months, contributing to the overall moderation in inflation. Looking ahead, the inflation rate is expected to remain subdued given current economic trends.

Friday, 14 January 2025, 15:30

US Retail Sales (MoM) (Jan)

In December 2024, U.S. retail sales increased by 0.4% compared to November 2024, following an upwardly revised 0.8% gain in November. This growth was primarily driven by higher sales at electronics and appliance stores, auto dealers, and food services and drinking places. The increase in retail sales suggests that consumer spending remained robust during the holiday season, despite concerns about inflation and economic uncertainty. Looking ahead, retail sales are expected to continue growing, albeit at a potentially slower pace. Analysts anticipate that consumer spending will increase by 2.5% this year, benefiting from moderated inflation, a stable job market, and government tax cuts. However, risks such as tariffs and stock market corrections could hinder momentum.