The Week Ahead - 10 - 14 March 2025

US – We expect CPI inflation to cool relative to January's upside surprises, with both headline and core coming in at a, still elevated, level of 0.3% m/m. This would see core remaining at 3.3%, with headline dropping to 2.9%. Shelter may see a small resurgence from the California wildfires after cooling recently. We might also see the first effects of the 10% tariffs on China in goods inflation, but it's unlikely for now to really drive up the m/m rate. The end of the week sees the release of the Michigan consumer sentiment measures, which fell sharply last month in response to worries about tariffs.

Eurozone – We expect a rebound in industrial production following a weak December. Manufacturing is barely bottoming out, but the latest PMI reading suggests some recovery. Markets will be closely watching speeches by Governing Council members for views on whether to hold or cut again at the April meeting. We think the ECB is building to a near-term (temporary) pause in its rate cutting cycle (see here).

China – CPI inflation for February (Sunday) is expected to drop back into negative territory again. This mainly stems from base effects related to the different timings of the Lunar New Year break. Producer price deflation is expected to ease slightly. All of this shows China is still far away from its new inflation target, which the government recently lowered to 2% (from 3%) – also see here.