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Wednesday’s data highlights include UK, German and Canadian headline inflation numbers, as well as US housing data. As upcoming inflation readings are for December, it is worth noting that they likely fail to capture inflationary pressures associated with disruptions and restrictions of the omicron wave.
UK CPI and PPI (0700 GMT)
UK inflation accelerated to an annual rate of 5.2% in December, according to City analysts, from 5.1% in November, which was the highest level since September 2011.
Shop prices jumped by an annual rate of 0.8% in the final month of the year, accelerating from a 0.3% pace in November, according to the BRC. Used car prices are likely to added to the upward pressure on the index, rising by another record high of 30.5% in the year to December, jump from a 28.6% annual pace recorded in November, according to an index compiled by Autotrader.
However, a decrease in motor fuel prices could introduce a degree of downside risk to forecasts. Unleaded petrol fell by 0.5% to 146.1 pence a litre between November and December, after rising by 1.0% in the same period last year, according to AA. However, unleaded petrol prices rose by an annual rate of 27% last month. Motor fuel prices added 0.18 percentage points to the 1.1 percentage point jump in November CPI.
With the Bank of England raising Base Rate by 15 basis points to 0.25% last month, Wednesday’s data have less capacity to shock the markets than in recent months. According to minutes of the December meeting, the Bank expects inflation to hover near an annual rate of 5% “through the majority of the winter period” before peaking at “around” 6% in April.
German Final Inflation to Confirm Near 40-year High (0700 GMT)
Analysts are expecting headline inflation for Germany to be in line with forecasts at +5.3% y/y in the final December reading, just above +5.2% y/y in November. This could be a promising sign of inflation beginning to stabilise, following a +0.7pt jump from October. After contracting in November by -0.2% m/m, inflation is set to rise by +0.5% m/m again.
The harmonised reading is set to come in at +5.7% y/y and +0.3% m/m. The Bundesbank is pricing a +3.6% HICP (+2.3% core) for 2022, reflecting inflationary pressures of high energy costs, supply chain disruption and input costs and strong demand and VAT rates returning to pre-pandemic levels.
With the ECB likely to only begin hiking in early 2023, the German economy sees little relief in upcoming months.
Canada CPI to Peak (1330 GMT)
The next BoC interest rate decision is coming up next week, however today’s Canadian inflation numbers will be too recent to fully incorporate price pressures resulting from the surge in Omicron cases.
Annual headline inflation is expected to rise moderately to +4.8% y/y from +4.7% y/y where it stabilised in October and November at an 18-year high. Canadian price levels have risen substantially over 2021 from a mere +1.0% y/y in January. The consensus is pricing the first and only deflationary reading of 2021 at -0.1% m/m for December.
US Housing Data Softens (1330 GMT)
Both housing starts and MBA mortgage applications data is due in today. US housing starts are expected to soften to from 1679k to 1650k in December, remaining slightly above pre-pandemic levels. The monthly reading is seen dropping to -1.7% m/m from +11.8% m/m in November.
Following last week’s inflation data which saw CPI likely peaking at 7.0% y/y, the Fed is all but set to raise interest rates in March and house prices are likely to begin to ease in 2022.
There are no key policy maker appearances scheduled for today. For the latest data forecasts click here.
| Date | GMT/Local | Impact | Flag | Country | Event |
| 19/01/2022 | 0001/0001 | * |  | UK | XpertHR pay deals for whole economy |
| 19/01/2022 | 0700/0800 | *** |  | DE | HICP (f) |
| 19/01/2022 | 0700/0700 | *** | | UK | Producer Prices |
| 19/01/2022 | 0700/0700 | *** | | UK | Consumer inflation report |
| 19/01/2022 | 0900/1000 | ** |  | EU | EZ Current Acc |
| 19/01/2022 | 0930/0930 | * | | UK | ONS House Price Index |
| 19/01/2022 | 1000/1100 | ** | | EU | construction production |
| 19/01/2022 | 1200/0700 | ** |  | US | MBA weekly applications index |
| 19/01/2022 | 1330/0830 | *** |  | CA | CPI |
| 19/01/2022 | 1330/0830 | ** | | CA | Wholesale Trade |
| 19/01/2022 | 1330/0830 | *** | | US | Housing Starts |
| 19/01/2022 | 1355/0855 | ** | | US | Redbook Retail Sales Index |
| 19/01/2022 | 1800/1300 | ** | | US | US Treasury Auction Result for 20 Year Bond |
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.