Focus on US GDP Report, UK CPI Inflation Drops

May 24, 2023 12:11

The preliminary US GDP report for the first quarter of the year will be among the most significant data releases for the rest of the week.

In the UK, the CPI inflation report showed that headline inflation fell sharply in April coming in at 8.7% on a year-to-year basis. However, the figure was still higher than the 8.2% anticipated by economists.

The Reserve Bank of New Zealand (RBNZ) raised borrowing costs by 25 basis points as expected. In its post-meeting announcement, the RBNZ’s board stressed that “the OCR will need to remain at a restrictive level for the foreseeable future, to ensure that consumer price inflation returns to the 1-3% annual target range, while supporting maximum sustainable employment.”

US Q1 2023 GDP Preliminary Report

The US Bureau of Economic Analysis (BEA) is expected to release preliminary data regarding the country’s GDP growth in the first quarter of 2023. According to economists’ forecast, the US GDP growth rate is likely to come in at 1.1% on a quarterly basis. If confirmed, the figure will match the Q4 2022 figure.

The GDP figure will be taken into consideration by the Federal Reserve governing board as the central bank’s policymakers try to tackle inflation by tightening monetary policy. The US National Association for Business Economics (NABE) released a report showing that the expected GDP growth this year will be 0.4%, down from 0.9% growth in 2022. The NABE report noted: “Interest rates are expected to decline, and inflation is expected to slow in 2024, while job growth is anticipated to moderate and the unemployment rate to rise.”

Tokyo CPI Inflation May Report

The Japanese Statistics Bureau will publish the May Tokyo CPI Inflation report on Friday morning. Market analysts expect Tokyo CPI inflation to tick higher reaching 3.9% on annualised basis. In April, the CPI figure had come in at 3.5%. Analysts polled by Reuters expect Tokyo core consumer inflation, considered a leading indicator of nationwide trends, to hit 3.3% in May.

Earlier in the month, the National core CPI inflation came in at 3.4% on a yearly basis. The figure kept alive expectations of a tweak to the Bank of Japan’s massive stimulus this year. Economists at BNP Paribas noted that “the BOJ will likely have little choice but to revise up its inflation forecast in July. With inflation expectations heightening, the chance of a policy tweak may be rising."

UK Retail Sales in April

In the UK, the Office for National Statistics (ONS) will release its April Retail Sales report. Economists suggest that retail sales fell by 2.8% on a yearly basis in April. High costs of living appear to have taken a toll on retail sales as UK family budgets suffer from high inflation while the hike of interest rates by the Bank of England (BoE) doesn’t make the situation any better for consumers.

A report by Retail Economics suggested: “Intentions to spend across retail are colliding with the prioritisation of spending in areas previously missed out during the pandemic, including upcoming summer holidays. This means that a greater degree of cautiousness is being exhibited when spending. Shoppers looking to trade down on essentials are turning to discounters to reduce the cost of the weekly food shop.”

US Durable Goods Orders April Report

The Durable Goods Orders report in April is the last important data release coming this week from the US. Market analysts suggest that orders fell by 1.1% in April on a monthly basis, although the Census Bureau had recorded a significant increase of 3.2% in March. The Durable Goods Orders, released by the US Census Bureau, measure the cost of orders received by manufacturers for durable goods, which means goods planned to last for three years or more, such as motor vehicles and appliances.

In a paper released by the Washington-based Brookings Institution, Ben Bernanke, ex-head of the Federal Reserve, and Olivier Blanchard, the IMF's chief economist from 2008 to 2015, said the inflation surge starting in 2021 was largely stoked by energy markets and shortages of automobiles and other durable goods.

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This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks

Miltos Skemperis
Miltos Skemperis Financial Content Writer

Miltos Skemperis’ background is in journalism and business management. He has worked as a reporter on various TV news channels and newspapers. Miltos has been working as a financial content writer for the last seven years.