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Weekly outlook

The Week Ahead: UK, US inflation; Ocado results

The Week Ahead: CMC Markets' Michael Hewson analyses key upcoming economic and company events.

Inflation is the theme of the week once again, with the US, the UK and the eurozone all set to announce their consumer price index (CPI) readings for August. On Thursday, a day after the release of the UK’s August CPI print, the Bank of England was set to raise interest rates again in a fresh bid to tame inflation, but the Bank delayed this decision to 22 September after the death of Queen Elizabeth II. Meanwhile, in a quiet week for company earnings, look out for updates from UK retailers Ocado and Dunelm, drinks company Fevertree, and US software firm Adobe.


Tuesday – US CPI (August)

The US consumer price index (CPI) increased 8.5% in the year to July, easing from 9.1% in June. The slowdown in the rate of inflation led to speculation that the US Federal Reserve might soften its stance on raising interest rates, perhaps with a view to cutting rates in 2023. However, in a hawkish speech at the Jackson Hole economic symposium last month, Fed chair Jay Powell vowed to “keep at it” in the fight to reduce inflation. 

With the Fed now in a so-called blackout period of limited communications ahead of its 20-21 September meeting, Tuesday’s CPI reading for August could offer an indication of whether the central bank is likely to raise rates by half or three-quarters of a percentage point later this month. The current target range of the federal funds rate is 2.25% to 2.50%. 

Some analysts have suggested that if CPI eases further, the Fed may opt for the softer option of a half-point rate hike. The problem with that approach, though, is that any soft pedalling from the Fed at this stage could unwind the tightening of financial conditions that we’ve seen since Jackson Hole. Furthermore, if the central bank is to maintain its narrative on increasing the target range of the fed funds rate to 3.5% to 4%, it really needs to be bold this month and implement a third successive 75-basis-point rate rise, irrespective of the August CPI print. 

After the September meeting, the Fed has only two more opportunities to raise rates this year – at meetings from 1-2 November and from 13-14 December. With several US policymakers calling for a front-loaded approach to rate rises, the odds appear to favour a 75-basis-point rise this month. That may go some way towards convincing markets that the Fed is serious about reducing inflation on a sustainable basis.

Wednesday – UK CPI (August)

UK consumer price inflation soared to a 40-year high of 10.1% in July, up from 9.4% in June, driven by rising food and fuel prices. Core CPI, which excludes food, energy, alcohol and tobacco prices, rose 6.2% in the year to July, up from 5.8% in June. The jump in core prices may be of greater concern than the headline rate for the Bank of England, which is set to raise interest rates by at least 50 basis points on Thursday. Last month, the Bank raised its base rate by 50 basis points to 1.75%. 

Since as far back as March, it has been clear that rising commodity prices were likely to push UK inflation in to double digits by the summer, and that’s exactly what has happened. Concerns were raised in the spring that the Bank of England was behind the curve on its rate-rise cycle. The spike in inflation – now at its highest level since February 1982 – has exposed the cautious Bank of England’s limitations and shortcomings, leading to criticism that it has failed to deliver on its low-inflation mandate.


Monday 12 September

No major announcements

Tuesday 13 September

US CPI (August)

See top three events, above 

Ocado Group Q3 results

With the Ocado share price languishing at its lowest level for four years, the grocery delivery and fulfilment technology company has struggled to convince investors that it can turn a profit. Earlier this year Ocado downgraded its outlook due to higher prices for raw materials, energy and products. At the time Ocado said it would have to increase prices, but it’s not clear whether this will offset the higher costs of doing business. 

The business is adding extra capacity at Purfleet and Andover, with a new facility opening in Canning Town. The company raised £578m in June in a discounted funding round so that it can speed up its investment in innovation and build solutions at a faster pace. 

Group-wide revenue fell to £1.3bn in the first half of the year, down 4% versus the first half of 2021. That said, revenue grew year-on-year in two business segments – UK solutions and logistics, and international solutions. Growth here helped to offset a decline in retail revenue, which fell 8.3% year-on-year to £1.1bn. 

The company slid to a half-year loss before tax of £211m, versus a loss of £27.9m in the year-ago period. The latest half-year loss was mainly due to lower sales and higher costs in the retail division, where profits fell 73% to £31.3m. Losses in the international solutions segment increased 0.6% to £57.2m. 

Ocado maintained its forward guidance, but with pressure on margins expected to have continued through Q3, the fourth quarter of the year could prove challenging. 

Fevertree Drinks half-year results

Having hit a six-year low in July, the Fevertree share price is down more than 65% year-to-date. In July the drinks company issued a full-year profit warning, despite posting decent half-year numbers. Preliminary half-year revenue rose 14% to £160.9m, with decent gains across all areas of the business. Management maintained full-year revenue guidance of £355m to £365m, though they also expressed concern over the impact of rising costs.

Higher costs are expected to weigh on gross margins. The company said that higher prices for glass  could squeeze margins by between 400 and 600 basis points this financial year, while a 50% rise in freight costs is expected to reduce EBITDA to between £37.5m and £45m, down from previous guidance of £63m to £66m.

Wednesday 14 September

UK CPI (August)

See top three events, above 

Dunelm full-year results

At its pre-close update in July Dunelm reported a 16% rise in full-year sales to £1.55bn, despite a disappointing showing in Q4 when sales fell 6% year-on-year to £358m. The retailer said it expects profit before tax to be slightly ahead of consensus of £207m, while trading in the new fiscal year had been solid. 

Despite being one of the few retailers to have bounced back strongly from the pandemic, Dunelm could feel the pinch as consumers cut back on discretionary spending amid high inflation. This risk is reflected in the Dunelm share price, which has fallen almost 50% this year to levels last seen during the first Covid-19 lockdown in April 2020.  

Thursday 15 September

Postponed: Bank of England interest rate meeting

Delayed until 22 September.

US retail sales (August)

The resilience of the US consumer in the face of shrinking disposable incomes has been a notable  feature of this year. Simply put, rising food and energy prices appear not to have dampened consumers’ willingness to go out and spend money. In the first half of this year, US retail sales grew month-on-month every month, except for a modest 0.1% decline in May. If higher prices were deterring consumer spending, you wouldn’t have known it from these numbers. 

In July, US retail sales were flat on a monthly basis, after a downwardly revised 0.8% month-on-month increase in June. The US labour market has continued to add jobs this year, based on monthly non-farm payrolls data, suggesting that retail sales growth will continue. Retail sales could also benefit from a fall in gasoline prices which has boosted consumer confidence. 

Consensus estimates suggest that retail sales grew 0.3% month-on-month in August. However, to sound a note of caution, consumer confidence remains fragile despite the recent rebound. It’s also worth noting that consumer credit has soared of late, suggesting that credit card spending may be fuelling retail sales growth. 

Adobe Q3 results

Adobe shares, down 30% year-to-date, slipped to a two-year low of $338 in June after the software company released its Q2 results. Although revenue in Q2 grew 14% year-on-year to $4.39bn, and profits came in at $3.35 a share, the company downgraded its revenue guidance for Q3 to $4.43bn. That was below expectations for $4.52bn. Bosses also lowered their full-year revenue forecast to $17.65bn, down from previous guidance of $17.9bn, citing the uncertain economic outlook and the company’s withdrawal from Russian and Ukrainian markets. 

The Adobe share price recovered from the June low, rebounding to a four-month high of more than $450 in August, despite the full-year revenue downgrade. More recently, however, the shares have given up those gains and now sit below $400. Profits for Q3 are expected to come in at $3.33 a share.

Friday 16 September

China retail sales (August)

The Chinese government’s rigid zero-Covid policy is likely to continue acting as a brake on the country’s economy for the remainder of the year. After strict lockdown rules were eased in several cities earlier this year, consumer spending recovered to some extent, rising from a low base. After contractions in March, April and May, retail sales grew 3.1% year-on-year in June. Growth then eased to 2.7% in July. 

Since the July data were released, China’s government has sought to manage expectations for economic growth this year, saying that its 5.5% target was an aspiration. Consumer confidence is likely to have remained weak in August, as lockdowns were imposed in Chengdu and in cities near Beijing. 

For August, estimates suggest that retail sales grew 3.1% on an annual basis. However, with Covid cases starting to rise again as the weather gets colder, this level of growth may not allay concerns that more economic headwinds are still to come. Meanwhile, industrial production is expected to have grown 3.8% year-on-year in August, flat compared to July.

EU CPI (August)

Preliminary data indicated that eurozone CPI hit a new record high of 9.1% in August, with core inflation at 4.3%. This prompted the European Central Bank to raise interest rates by 75 basis points on Thursday, a second hike in seven weeks after the ECB raised rates by 50 basis points in July. The latest rate rise pushed all three of the ECB’s key interest rates in to positive territory for the first time since 2014. 

Although prices have already risen steeply since CPI was at 8.1% in May, there are concerns that inflation could rise even higher over the coming months. Producer price inflation is more than three times greater than consumer price inflation, suggesting that further retail price rises are baked in.


Dividend payments from an index's constituent shares can affect your trading account. View this week's index dividend schedule.


Abcam (UK) Half-year
Braze (US) Q2
Kape Technologies (UK) Half-year
Matrix Service (US) Q4
MP Evans (UK) Half-year
Ocean Power Technologies (US) Q1
Oracle (US) Q1
Planet Labs PBC (US) Q2
Rent the Runway (US) Q2
Churchill China (UK) Half-year
Core & Main (US) Q2
Fevertree Drinks (UK) Half-year
Innovage (US) Q4
Ocado (UK) Q3
Oxford Nanopore Technologies  (UK) Half-year
Smart Metering Systems  (UK) Half-year
Trustpilot Group (UK) Half-year
Central Asia Metals (UK) Half-year
Dunelm (UK) Full-year
ITM Power (UK) Full-year
LightPath Technologies (US) Q4
Pan African Resources (UK) Full-year
Pharos Energy (UK) Half-year
Redrow (UK) Full-year
Ricardo (UK) Full-year
Tullow Oil (UK) Half-year
Adobe (US) Q3
DFS Furniture (UK) Full-year
Gresham House (UK) Half-year
Hilton Food (UK) Half-year
Kier (UK) Full-year
MJ Gleeson (UK) Full-year
Oxford Biomedica (UK) Half-year
Renishaw (UK) Full-year
THG (UK) Half-year
Wickes (UK) Half-year
No major announcements  

Company announcements are subject to change. All the events listed above were correct at the time of writing.

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