Inflation dominates Australian business and markets sentiment this week, as well as the EU, while on Friday inflation will return to the forefront for US markets, as the current US earnings season continues to grab headlines with a string of reports from tech and energy giants.
The first GDP estimates from the US and EU economies are also to be released.
For Australia, this week – which will be shortened in Australia and NZ by the Anzac Day break tomorrow – sees the release of the Consumer Price Index for the March quarter on Wednesday, along with the monthly inflation figure for the month of March, as well producer and export and import price data later in the week.
The inflation figures this week will be the last important data releases ahead of the Reserve Bank’s board meeting on May 2, and the 2023-24 federal budget a week later.
Most economists think inflation will show another fall, confirming that it peaked in the December quarter at 7.8% (and 8.4% for the monthly indicator).
AMP chief economist Shane Oliver says, “We expect the CPI to rise 1.3% quarter on quarter or 6.9%yoy, down from 7.8% year on year in the December quarter. (We) expect a further acceleration in rent, gas & electricity inflation but roughly flat fuel prices and slower goods prices, new dwelling construction costs and holiday travel costs.”
He says trimmed mean (core) inflation is likely to slow to 1.4% growth from the December quarter and annual growth of 6.7% from 6.9% in the December quarter.
He also sees the March Monthly CPI Indicator is expected to fall to 6.7% yoy from 6.8%.
March quarter producer price inflation data is expected to show a further slowing from an annual rate of 5.8% on Friday and import and export prices indices on Thursday will give us a good idea of the performance of the terms of trade in the three months to March.
March credit growth data from the Reserve Bank will also be out on Friday and is expected to show a further moderation.
There a more corporate events this week – Woodside Energy’s annual meeting later this week could see a fight over climate policy. Building products group CSR is down to release its 2022-23 figures late in the week.
And there are some important quarterly reports from Fortescue Metals Group, Northern Star, Newcrest (and its suitor, Newmont of the US) and IGO and Pilbara Minerals.
In the US the monthly price, consumption, income and spending data will be issued on Friday. It is data that the Federal Reserve watches closely, especially what’s called core PCE inflation (PCE is Personal Consumption Expenditure) and the price data is called the PCE Inflation Index.
It is forecast to ease to an annual 4.5% from 4.6% in February.
This will be final data before the two-day Fed meeting on May 2 and 3.
The important first estimate of March quarter GDP will be out on Thursday – 2% is the market forecast. As well as this there’s data on US employment costs, initial jobless claims, home prices and durable goods orders.
US March quarter earnings reports will also ramp up this week (See separate story).
Eurozone March quarter GDP is due Friday and is likely to show low but positive growth. The early estimate for EU inflation and unemployment in April will be issued late in the week. Economists expect to see some signs of an improvement.
Friday also sees the first meeting of the Bank of Japan under new governor Kazuo Ueda.
Japanese data for jobs and industrial production will also be released on Friday.
