Week ahead: City eyes potentially ‘staggering’ inflation figures

The City will turn its gaze to what is likely to be another tranche of “staggering” inflation data in a week bulging with economic and corporate updates.

London’s premier FTSE 100 index whipsawed last week, dropping sharply on Monday before finishing the week up 0.41 per cent at 7,418.15 points.

The mid-cap domestically-focused FTSE 250 index, which is more aligned with the health of the UK economy, followed a similar trend, ending the week up 0.52 per cent at just under 20,000 points.

Intensifying concerns over the global economy heading for a protracted period of weak growth prompted investors to ditch stocks at the beginning of last week.

A “staggering” fresh UK inflation reading on Wednesday could trigger a similar reaction from traders this week, according to analysts at Deutsche Bank.

The investment bank said the cost of living may have reached as high as 9.3 per cent last month, caused by the 54 per cent uplift to the cap on energy bills landing in April.

“Services inflation will largely dictate the size of any potential beat (or miss) we get in April,” Deutsche Bank said.

Prices are already seven per cent higher than they were a year ago, the quickest acceleration since the early 1990s.

That rapid upward price expansion has already driven the Bank of England to raise interest rates from a record 0.1 per cent to their highest level in 13 years in just six months.

Governor Andrew Bailey will shed more light on the Bank warning the UK is headed for a recession when he is grilled by MPs tomorrow.

Signs from new jobs figures on Wednesday of strong wage pressures continuing to emanate from the labour market will strengthen markets’ expectations of more rate hikes from the Bank.

Royal Mail leads the corporate agenda, updating markets on Thursday.

Fund manager Investec and National Grid also post results on the same day.

New retail sales figures round off the week on Friday.