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MNI Global Morning Briefing: Focus on EZ Inflation

MNI (London)

Tuesday kicks of with the release of German retail sales at 0700GMT followed by EZ flash inflation at 1000GMT. In the North Americas, the release of Canadian GDP figures will be closely watched at 1330GMT.

German retail sales seen rising slightly

Retail sales are expected to increase by 0.5% in January after plunging by 9.6% in December. The renewed lockdown in Germany resulted in the closure of shops from December 16onwards and hence to the partial loss of Christmas sales. While food stores posted a monthly increase in December, non-food stores, especially clothing and footwear retailers saw a sharp drop in sales. Online sales surged to over 30% in December. As tight restrictions remained in place in January as well as February, retail sales are likely to remain subdued going forward.

EZ inflation expected to accelerate

EZ inflation is seen unchanged at January's level of 0.9% in February. Inflation rose sharply in January and the increase was mainly led by a sharp rebound of German inflation due to the end of the VAT cut. But also Spain and Italy saw upticks of one percentage point. Energy price base effects will boost inflation in the coming months, although underlying price pressures are likely to remain subdued.


Source: Eurostat

Canadian GDP expected to grow in Q4

Markets are looking for a 7.2% annualized increase in Canadian GDP in Q4, following an annualized growth rate of 40.5% in Q3. GDP rebounded sharply in the third quarter as the economy reopened. However, the monthly growth rate slowed during Q3 before it recorded the lowest since April in October. Monthly GDP increased by 0.7% in November and markets are looking for a deceleration to 0.1% in December. Rising infection rates led tighter restrictions in many areas with several cities announcing a new lockdown, which weighs on business activity, especially in the service sector.

The main events to look out for on Tuesday include ECB's Fabio Panetta and Elizabeth McCaul as well as Fed's Lael Brainard and San Francisco Fed's Mary Daly.

MNI London Bureau | +44 203-865-3814 | irene.prihoda@marketnews.com
MNI London Bureau | +44 203-865-3814 | irene.prihoda@marketnews.com

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