Today's US retail sales (1230 GMT) report is set to be an important litmus test of the health of US consumers. Accumulating evidence of a soft first quarter for the economy has resulted in early estimates of Q1 GDP growth being gradually lowered.
However, wWith poor winter weather conditions thought to have played a significant role in the slowdown, today's retail sales report for March is expected to provide a 'less-distorted' picture of the strength of domestic consumption.
"A combination of milder weather, rising real incomes and buoyant confidence will likely have provided a more supportive backdrop in March and we forecast a 0.9% rebound in headline sales", says Lloyds Bank.
In UK, today's focus will also be on inflation (0830 GMT). Last month saw the headline CPI inflation rate fall to a record low of 0.0%y/y, largely driven by falls in petrol and food prices. The peak impact of the cuts to retail energy tariffs announced so far is set to feed through into the March numbers. That along with further weakness in food prices is likely to push inflation lower and the annual rate is expected to briefly dip into negative territory to -0.1%, acccroding to Lloyds Bank research.
However, despite the likelihood of near-zero price inflation over the next few months, the central view of the MPC - consistent with its Inflation Report- is still that the next move in the policy rate is likely to be upwards and there is possiblility of a hike before year end.
