Tuesday preview: Eurozone CPI forecast to improve in December

Eurozone inflation is expected to have improved in December after the European Central Bank boosted its stimulus measures.

The consumer price index is predicted to rise to 0.4% year-on-year in December from the previous month’s 0.2%. However, it remains well below the ECB’s target of just below 2%.

In an effort to turn around weak inflation, the ECB in December decided to lower the deposit facility rate by 10 basis points to -0.30% and expand its quantitative easing programme until the end of March 2017 from an earlier deadline of September 2016.

The report from Eurostat follows Monday’s report from the Federal Statistics Office on German inflation which showed the CPI unexpectedly slowed in December. CPI, on a EU harmonised basis, rose an annualised 0.2% last month from November’s 0.3%, missing forecasts of 0.4%.

“Today’s release adds strong downside risks to our already below-consensus forecast that euro area “flash” HICP inflation (to be released tomorrow) has increased to 0.3% in December from 0.2% previously (consensus: 0.4%); at 2Dp, in fact, we are tracking 0.25%,” according to Barclays Research analysts.

“Underpinning our euro area forecast is the expectation that Italian HICP inflation (which will be also released tomorrow) has increased to 0.4% from 0.2%, although we flag downside risks to our forecast.”

German jobs data for December is also due on Tuesday with analysts expecting the jobless rate to remain at 6.3% and for the change in unemployment to fall 8,000.

Europe’s biggest economy will also see the release of a report on German retail sales with consensus estimates at a 3.7% rise in November from a year ago.

In the UK, Markit/CIPS publishes its purchasing managers’ index on construction activity for December, which is projected to rise to 56 from 55.3 a month earlier.

Tuesday 5 January

INTERIM DIVIDEND PAYMENT DATE

Amec Foster Wheeler, Dee Valley Group, Dee Valley Group (Non-Voting), Hill & Smith Holdings, TR Property Inv Trust

QUARTERLY PAYMENT DATE

Blackrock North American Income Trust

QUARTERLY EX-DIVIDEND DATE

JP Morgan Chase & Co, Torchmark Corp.

INTERNATIONAL ECONOMIC ANNOUNCEMENTS

Auto Sales (US) (15:00)

Unemployment Rate (GER) (08:55)

Eurozone inflation (10:00)

GMS

Partnership Assurance Group

UK ECONOMIC ANNOUNCEMENTS

PMI Construction (09:30)

FINAL DIVIDEND PAYMENT DATE

Town Centre Securities