Next week's economics: 17-21 Dec

Inflation is rising, next week's numbers could show. On Tuesday the ONS could say that consumer price inflation rose from 2.7 to around 3 per cent in November, thanks to higher food and utility bills and the falling out of the figures of a petrol price fall last November.

These price rises might already be depressing household spending. Although Thursday's official figures could show a rise in retail sales volumes in November, after a fall in October, these could be a mere 1.5 per cent up on a year ago. Wednesday's CBI survey will give us an early clue as to sales in December, and these too are likely to be modest.

We'll also see further evidence of a deterioration in the public finances. Friday's numbers could show that the current budget deficit - which is not distorted by the transfer of the Royal Mail pension fund - has been almost £80bn so far this year - higher than in the same period of 2011-12. Friday's numbers will show us why this is. They will show that foreigners are net lenders - another way of saying the UK had a current account deficit in the third quarter - and that companies are also still big net lenders, with their retained profits exceeding investment. The counterpart to this - pretty much by identity - is that the government must borrow.

We'll see on Wednesday what the Bank of England's monetary policy committee makes of all this. It's likely to regard the rise in inflation as temporary, and probably considered more quantitative easing as a response to the likely weakness of the economy in the fourth quarter.

In the US, meanwhile, two important surveys - the Empire State and Philadelphia Fed surveys - are likely to show manufacturing activity almost stagnating, with little optimism about the future. Housing starts, however, might paint a brighter picture. Although November's data might be skewed by Hurricane Sandy, the underlying trend is firmly upwards.

We might just see a glimmer of hope in the eurozone. The National Bank of Belgium's survey might show that business conditions have stopped deteriorating, and Germany's Ifo survey could post a second successive monthly rise.

There might, though, be a big warning signal for investors on Monday. US capital flows data could show that, in recent months, foreigner investors have increased their buying of US equities. This points to lower annual returns, as it can be a sign of excessive optimism.

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