The upcoming week's economic calendar is a relatively light one, offering a breather after the NFP release. However, it's not devoid of significant events. The U.S. existing home sales release on Monday sets the tone, followed by the Bank of Japan's summary of opinions and U.S. inflation data on Tuesday. The week's pivotal moment is the Fed Chair nomination vote in the U.S. Senate, with Kevin Warsh expected to take over from Jerome Powell on Friday.
Wednesday brings the wage price index q/q from Australia and the PPI m/m from the U.S. Thursday is a big day with the U.K.'s GDP m/m, U.S. retail sales m/m, and unemployment claims. Several FOMC members are also expected to deliver remarks throughout the week.
The consensus for core CPI m/m in the U.S. is 0.3%, with headline CPI m/m expected at 0.6%. The y/y figure is projected to rise to 3.7%. This week's CPI data will be closely monitored for how the Middle East conflict is feeding into consumer prices. Increased energy costs are expected to push the y/y figure higher, potentially to 3.7% or even 3.8%. Food prices are also projected to grow over time due to rising transportation costs and higher prices for agricultural inputs, such as fuel and fertilizers.
Core inflation, which excludes food and energy, is expected to remain firm. Estimates suggest the core CPI could rise by around 0.5% on the month, keeping the annual rate near 2.9%. Much of this increase is likely to come from the services sector. Shelter costs may temporarily rebound due to statistical distortions linked to earlier government shutdown effects, although analysts expect housing inflation to resume its cooling trend as rent data continues to soften.
Services inflation outside of housing remains firm, with higher fuel costs likely to impact airfare prices and put pressure on core CPI. Used car prices may also rebound, although some goods categories that surged in March are expected to moderate. Looking ahead, core inflation is still projected to stay at near 3% for much of 2026, according to Wells Fargo. Underlying pressures remain persistent, but softer shelter costs should help while weaker wage growth may limit companies' pricing power later in the year.
In Australia, the consensus for the wage price index q/q is 0.8%, with annual wage growth expected to ease slightly to 3.3%. Westpac analysts note wage momentum is cooling modestly, with softer growth in individual wage agreements helping to offset firmer gains from awards and enterprise bargaining agreements. The last two quarterly readings have both come in at 0.8%, marking a step down from the 0.9% pace recorded in the first half of last year.
Markets will also closely watch the upcoming minimum wage and awards decision, as it could influence wage dynamics in the second half of the year. Westpac's forecast for the September quarter is also a 0.8% increase assuming a 4.25% decision.
In the U.K., the consensus for GDP m/m is -0.2%, compared to the prior 0.5%, while preliminary GDP q/q is expected at 0.6%. This week's print is expected to show a modest pullback in March following February's surprisingly strong growth. However, Q1 growth is still projected to be broadly in line with the BoE's projections. Recent PMIs pointed to softer momentum across both manufacturing and services, with uncertainty related to the Middle East conflict weighing on sentiment.
The BoE continues to signal a cautious approach, balancing slowing growth against persistent inflation risks. There is evidence households and businesses may have front-loaded activity in March due to concerns about upcoming price increases. This means the March print could surprise to the upside without the economy actually accelerating.
Elevated energy and fertilizer costs resulting from the Middle East conflict increase the risk of second-round inflation effects, according to Wells Fargo analysts. As a result, their outlook now accounts for two rate hikes this year.
In the U.S., the consensus for core retail sales m/m is 0.6%, with headline retail sales m/m expected at 0.6%. U.S. retail sales are expected to slow notably in April following March's strong surge, with headline growth supported mainly by higher spending at the pump due to rising gasoline prices rather than real consumer demand in other areas. Softer vehicle sales and signs of weaker discretionary spending point to a more cautious consumer backdrop.
While nominal sales may still appear resilient, underlying spending momentum looks less convincing as inflation continues to erode purchasing power. Consumers are increasingly relying on savings and credit to maintain their spending levels, suggesting that demand could soften further in the months ahead.
Personally, I think the upcoming week's economic calendar is a fascinating mix of events, offering a unique insight into the global economy. The U.S. CPI data, in particular, is a key indicator of how the Middle East conflict is impacting consumer prices. The potential for second-round inflation effects due to elevated energy and fertilizer costs is a critical detail that many people might overlook.
In my opinion, the U.K.'s GDP m/m data is also a crucial indicator to watch. The modest pullback in March, following February's strong growth, could be a sign of front-loaded activity due to concerns about upcoming price increases. This raises a deeper question about the sustainability of economic growth in the face of persistent inflation risks.
From my perspective, the upcoming week's economic calendar is a reminder of the interconnectedness of global economies. The Middle East conflict is a key factor influencing inflation and economic growth in various countries, and its impact is likely to be felt for some time to come.
One thing that immediately stands out is the potential for second-round inflation effects. As energy and fertilizer costs rise, the risk of higher prices for goods and services increases. This could have a significant impact on consumer spending and economic growth, particularly in countries heavily reliant on energy imports.
What many people don't realize is that the Middle East conflict is not just a regional issue. Its impact on global energy markets and supply chains is far-reaching, affecting the prices of goods and services worldwide. This raises a deeper question about the resilience of global supply chains and the potential for long-term disruptions.
If you take a step back and think about it, the upcoming week's economic calendar is a microcosm of the broader economic landscape. It highlights the interconnectedness of global economies and the potential for second-round effects to impact economic growth and inflation.
This raises a deeper question about the sustainability of economic growth in the face of persistent inflation risks. As central banks continue to navigate the delicate balance between growth and inflation, the upcoming week's events will be a crucial indicator of the path ahead.
