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The main theme of Wednesday's data events is inflation. At 0700BST UK inflation figures are released, followed by the final EZ consumer price index at 1000BST. Canadian April CPI is due 1330BST.
UK consumer prices set to rise
Inflation is forecast to accelerate to 1.5% in April, up from 0.7% seen in March. This would mark the highest level since March 2020, where the index also registered at 1.5%. The largest upward contribution in March came from transport and clothing prices, mainly due to base effects as petrol prices rose in March 2021 compared to a fall a year ago and clothing prices recovered as well. This pattern is likely to continue in April as base effects will boost inflation figures going forward. Meanwhile, core CPI is seen slightly higher at 1.3% after Feb's reading of 1.1%.
Survey evidence is in line with market forecasts. The services PMI indicated another rise in output charges in April, although the growth rate of charged inflation eased slightly from March's 40-year high.
Source: Office for National Statistics
Final EZ inflation seen at flash estimate
Flash inflation in the eurozone rose to 1.6% in April, up from 1.3% seen in March. This marks the second successive increase and the highest level since April 2019 (1.7%). Energy prices recorded the largest monthly increase of 10.3%, after rising by 4.3% in March. At the same time, service and food inflation slowed and non-energy industrial goods accelerated marginally. Markets are looking for the final print to confirm the flash estimate.
The European Commission expects inflation to vary significantly this year due to fluctuations stemming from energy prices and VAT cuts in 2020. The Commission sees inflation in the eurozone at 1.7% in 2021, before it is estimated to ease to 1.3% in 2022.
Canadian consumer prices forecast to rise sharply
It's Canada's turn to report breakaway inflation on comparisons to last year's plunge in gasoline prices. Companies in April also faced production bottlenecks and households went into a more severe third-wave lockdown than the U.S. or UK.
The CPI accelerated to a 3.1% pace in April from a year earlier according to Montreal-based National Bank Financial. Inflation hasn't been 3% since July 2018 and hasn't exceeded that mark since 3.2% in September 2011.
BOC Governor Tiff Macklem told reporters Thursday he's sticking with his forecast inflation will soon reach around 3% and later recede because some parts of the economy remain very weak. Inflation already jumped to 2.2% in March from 1.1% in February.
The events calendar throws up a busy schedule on Wednesday. The main speakers to follow include ECB's Fabio Panetta, Andrea Enria and Philip Lane as well as Fed's Randal Quarles and St. Louis Fed's James Bullard.
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.