Inflation Data from Major Economies and China’s Growth Forecasts Set to Influence Global Markets

The week ahead is set to be pivotal for the global economy, with major inflation data and economic growth figures from key countries set to make waves. The US, EU, UK, and China will all release crucial data, providing important insights into economic trends that could affect monetary policies, market sentiment, and global growth projections.

Inflation Data from the US, EU, and UK

The US Consumer Price Index (CPI) for December is expected to show continued inflationary pressures. After a 2.7% year-on-year increase in November, the headline CPI for December is projected to rise to 2.9%. Core inflation, excluding volatile items like food and energy, is forecast to remain steady at 3.3%. The persistence of inflation could influence the Federal Reserve’s pace of interest rate cuts in 2025, potentially maintaining pressure on equity markets.

Other economic data to be released in the US includes the Producer Price Index (PPI) for December and retail sales figures. Analysts expect the PPI to maintain its 3% year-on-year rise from November, while retail sales for the holiday season are forecast to show a modest 0.6% month-on-month increase.

In Europe, final inflation data for December will shed light on the trajectory of inflation in the eurozone. Eurostat’s preliminary estimates suggest an uptick in the eurozone’s headline CPI to 2.4%, largely due to base effects from energy prices. Core inflation, which excludes food and energy, is expected to hold steady at 2.7%. The European Central Bank (ECB) is likely to continue with rate cuts, aiming to bring inflation down to its 2% target by the end of 2025.

In the UK, inflation is expected to remain at 2.6% year-on-year for December, with core inflation slightly easing to 3.4%. With the UK economy grappling with rising inflationary pressures and a weakening currency, concerns about stagflation are mounting.

China’s GDP Growth and Economic Outlook

Attention will also be on China’s economic performance, as the country prepares to release its GDP growth figures for the final quarter of 2024. The market consensus is that China’s GDP will rise by 5% year-on-year, up from 4.6% in Q3, driven by the government’s stimulus measures. Full-year growth for 2024 is expected to meet China’s target of 5%.

Other data releases from China, including industrial production, retail sales, and housing market indicators, will provide further insight into the country’s economic trajectory. With China being the second-largest economy in the world, these figures will be crucial in determining the global economic outlook and could influence commodity prices, currency movements, and central bank policies.

As major economies release these key indicators, their implications will likely resonate across global financial markets. Inflationary trends, growth projections, and central bank actions will shape the economic landscape in the weeks ahead, making these data releases crucial for investors, policymakers, and businesses alike.