A CLEARER picture on consumer spending may emerge this week as firms including Thomas Cook and Diageo are among those due to update the City.
The Bank of England’s much-awaited inflation report on Wednesday is likely to see rate-setters trim back growth forecasts following the UK’s sluggish pull out of recession.
The 0.1% first estimate for the final three months of 2009 marked a technical end to the slump, but was little cause for cheer with the market expecting a stronger advance.
The Bank surprised most forecasters with bullish predictions of a strong bounce-back in November’s report, which forecast the UK economy growing at a year-on-year rate of around 4% by the end of 2010.
Inflation meanwhile jumped at a record rate in December to 2.9% after higher petrol prices and VAT effects, and will almost certainly have breached 3% in January after the return of the tax to 17.5%. This will prompt another open letter from Governor Mervyn King to the Chancellor.
The forecasts could show a bigger spike for inflation than previously thought in the first half of 2010 before the slack in the economy opened up by the slump brings prices back down.
Travel giants Thomas Cook and Thomson Holidays owner TUI Travel will go head to head in trading updates this week with the focus on prospects for the all-important summer season.
TUI – first up tomorrow – said in December that demand for summer holidays this year had held up despite “exceptional fuel and currency driven cost inflation” as well as lingering economic gloom.
