Also coming up today is UK public finances data for February, which will show how much the government borrowed over the month and reveal how the chancellor is doing as the fiscal year to the end of March 2017 draws to a close.
In Philip Hammond’s Spring budget earlier this month, the outlook for the public finances was revised to show lower borrowing over the coming years than previously expected – partly because economic growth has been more resilient.
Borrowing in the full 2016-17 fiscal year is now expected to be £51.7bn, after budget forecasts were revised down from £68.2bn. That would be sharply lower than the £76bn borrowed by the government in 2015-16.
Here is our preview story on the UK inflation data, out at 9.30am:
Traders at IG, the spread-betting firm, are expecting markets to be pretty subdued when trading gets underway in Europe this morning:
The agenda: UK inflation expected to return to 2% target
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
It’s UK inflation day, and it is expected to a significant one. The consumer prices index has been rising since October and the latest data from the Office for National Statistics is expected to show a further rise in February to 2.1% from 1.8% in January.
That would be the highest since November 2013 and mark a return to the Bank of England’s 2% target after a prolonged period of below-target inflation.
Brexit has put an end to the weak inflationary pressures of recent years, as the sharp drop in the value of the pound since the vote has pushed up the cost of imports from abroad and is starting to feed through to higher prices in the shops.
Higher food and petrol prices are expected to contribute to the higher rate of inflation in February.
Inflation is expected to rise to about 3% by the end of the year, putting increasing pressure on household finances at a time when wage growth is slowing.
Higher inflation does not mean the Bank will raise interest rates any time soon though, as Philip Shaw from Investec explains:
We still expect inflation to surpass 3% over the summer. But we do not expect the MPC to respond by raising rates unless there is a material acceleration in pay rates, a scenario which data earlier this week suggest is unlikely for now.
The data is out at 9.30am.