Supermarket prices may see Carney write to Osborne

When Mark Carney took the top job at the Bank of England 18 months ago it’s unlikely he expected his first letter of explanation to the Chancellor would be over inflation being too low.

Mark Carney could write to George Osborne over the supermarket price war. Picture: Getty

However, that is what is widely expected to happen this week as the CPI measure for December falls below the bank’s margin of one percentage point either side of 2 per cent. It follows not just plunging petrol prices but also a ferocious price war among Britain’s big grocery chains.

Last week, Tesco and Sainsbury’s claimed to have recovered some momentum as a result, so Morrisons is under pressure to reassure its shareholders when it updates on Christmas trading figures tomorrow.

Today

• Taylor Wimpey – Following an upbeat statement from Persimmon last week, Taylor Wimpey is among a number of other builders expected to confirm that the market for new homes remains buoyant.

Tomorrow

• BRC retail sales – Reports on the effect of Britain’s enthusiastic adoption of “Black Friday” have so far been mixed, so the British Retail Consortium’s figures for December will help bring clarity on how the high street performed over the key festive period.

• Inflation – Official figures are expected to show the consumer prices index plunged below 1 per cent last month, amid tumbling petrol costs and supermarket price wars.

• Morrisons – The supermarket chain is expected to show an improvement in trading as its price–cutting strategy starts to bear fruit. The City still expects a drop in like–for–like Christmas sales, but the performance should be better than last year following an improving trend set by rivals Tesco and Sainsbury’s.

• Asos – The online retailer is now under pressure after a difficult year ended with its system crashing briefly during frenzied late–December sales. Analysts have also warned its update may disappoint after peer Boohoo.com complained of fierce competition.

Wednesday

• Barratt Developments – In November the builder said it was on target to deliver 15,000 completions in its current financial year.

Thursday

• Home Retail Group – The firm’s two trading brands are expected to have enjoyed a relatively successful Christmas. The City expects Argos to post like–for–like sales up 2.2 per cent, while DIY chain Homebase is forecast to report same–store sales up 4.1 per cent as it carries out a programme of store closures and upgrades.

• Mothercare – The retailer’s festive trading figures are expected to reflect the steady progress the group has made with its turnaround plan. Oriel Securities forecasts that Mothercare will post third–quarter like–for–like sales up 
1 per cent, compared with a 4.4 per cent fall a year ago.

• RICS – Most recent evidence has house price growth slowing significantly, so RICS’ monthly survey will be closely followed.

Friday

• Eurozone inflation – official figures are expected to confirm a flash estimate that the currency block has drifted into deflation territory.