PPI and CPI

Consumer and producer price inflation have been on a downward trajectory over the past few months as the effects of Sterling’s past depreciation fades. In the year to March, CPI rose 2.5%, the slowest pace of increase in a year. Over the course of this year this trend looks set to continue, however some seasonal factors as well as planned increases in utilities means a sideways move in CPI in April could be a possibility.

While it won’t yet be evident in the data, the effects of the recent rally in Brent crude prices will be worth looking out for in upcoming producer price data releases.

GDP and business investment

The news on the UK’s growth performance at the start of the year was pretty bad in the first cut of ONS data, released last month. Friday sees the publication of the second estimate. While we’re not expecting the weak start to the year to be revised away, we will get more insight into where any weakness was concentrated. Given the lack of confidence amongst consumers and subdued retail sales, household spending is likely to have seen a pretty rotten first quarter. Additionally, there could well have been weather related disruptions to trade, holding back exports.

The next big question will then be, what’s the likelihood of recouping some of this weakness later in the year? Our updated growth forecasts for this year and next will be published alongside our 2018q2 Manufacturing Outlook report on 4^th June.