Next week will bring key inflation data in the UK, EU and Japan, as well as unemployment and retail data in the UK.

What do analysts expect and what implications could the data have on the prospect of interest rate cuts?

UK unemployment- Tuesday

UK unemployment edged up to 3.9% in the three months to January, but this is still low by historical standards. The expectation is for unemployment to stay around these numbers in the next print due on Tuesday.

UK inflation- Wednesday

UK inflation dropped to 3.4% in February, the lowest year-on-year rate since September 2021, with some analysts predicting it to drop even further in the March print.

“Indeed, after the February report printed in line with our expectations, we see headline CPI slipping marginally to 3.1% year on year,” said Deutsche Bank economists.

Food, alcohol and tobacco disinflation is expected to gather pace, but this could be offset by higher transport, recreational and accommodation prices.

Retail sales- Friday

British Retail sales volumes have been surprisingly resilient.

Unchanged in February, following an upwardly revised 3.6% increase in January and defying market forecasts, which had anticipated a 0.3% decline.

However, food and fuel retail trades lagged, so analysts will be keen to check progress in these segments in the upcoming data print for March.

US retail sales- Monday

Upcoming economic indicators from the US come in the wake of a slightly hotter-than-prediction inflation print.

Consensus estimates have month-on-month retail sales growing by 0.3% month on month in March (though Deutsche Bank analysts predict a -0.2% contraction).

The latter would be a welcome outcome for those banking on interest rate cuts sooner rather than later. Industrial sales on Tuesday will also be on interest, with Deutsche Bank predicting a 0.2% month-on-month uptick following a 0.1% uptick in February

US initial jobless claims- Thursday

The US jobs market has been particularly resilient. The number of people claiming unemployment benefits in the US fell by 11,000 to 211,000 in the week ending 6 April, well below market expectations of 215,000.

With unemployment at a rock-solid 3.8% (“a milestone in America’s comeback” according to President Joe Biden), hawkish policymakers see even further justification to keep the brakes on easing monetary policy for now.

EU inflation- Wednesday

In stark contrast to the US, the bloc has made good progress in bringing down inflation, to the extent that “the Eurozone economy has mostly stagnated since late 2022”, according to UBS.

Wednesday’s inflation print will show whether the union has moved closer to its 2% year-on-year inflation target.

It’s not far off – flash figures earlier this month showed consumer price inflation declined to 2.4% year on year in March, matching November’s 28-month low and falling short of market expectations of 2.6%. Final figures on Wednesday will hopefully confirm this.

Japan inflation- Friday

“We are optimistic about Japan’s cyclical recovery in the near term, and next week’s data releases will support our view,” predict UBS analysts.

They said that consumer price inflation is expected to stay at 2.8% year on year for a second month in a row in March, while core inflation (excluding fresh food) should ease to 2.6% from the previous month’s 2.8% due to a high base last year.

“Higher commodity prices and the weak JPY are likely to have pushed up headline inflation, while hotel/other service prices also should have risen meaningfully,” UBS added.