The week ahead: Budget Day, plus financials from Kingfisher

Consumer confidence will be in the spotlight next week when retailers including B&Q and Next publish figures.

Monday:
Lloyds TSB will publish its monthly Spending Power Report, while the Office for National Statistics (ONS) will post monthly turnover, exports, and orders data for production and services industries.

Tuesday:
Lower utility bills and discounting from struggling retailers is set to generate another fall in the rate of inflation when official figures are published by the Office for National Statistics.

The consumer prices index is forecast by brokers at Investec Securities to fall to 3.2 per cent in February from 3.6 per cent in January as energy cuts by E.ON and Scottish Power came into effect.

Non-food retailers also continued to slash prices in the month, according to the British Retail Consortium, as they battled to pull in cash-strapped consumers.

The dip in the CPI rate of inflation will continue the downward trend experienced in recent months and matches forecasts by the Bank of England, which predicted that the rise in cost of living would ease throughout 2012.

However, Victoria Cadman, economist at Investec, warned February’s inflation outturn is ‘unlikely to be without some upward pressures too’ with food and fuel prices appearing to have recorded firmer month-on-month rises.

The easing rate of inflation will be welcomed by households who were squeezed by high inflation and sluggish wage growth throughout 2011.

The data will add further weight to the Bank’s decision last month to pump an extra £50billion into the economy through its quantitative easing programme.

Bank governor Sir Mervyn King and his colleagues have forecast the rate of inflation to dip below the Government’s 2 per cent target at some point in early 2013. But some economists have suggested CPI could slide to nearly 1 per cent as early as the final three months of 2012.

Wednesday :
Chancellor George Osborne will deliver the UK 2012 Budget.

Thursday:
B&Q parent Kingfisher will hail the first phase of its business strategy when it reveals a 19 per cent rise in annual profits to around £800million.

One of the strategy objectives, set in 2008, was to drive up B&Q’s profits, which four years ago were £106 million but are forecast to be around £234million for the year to January 31. The company has now reached the end of the first part of its plan and is preparing to move into the next phase, which will include rolling out new products exclusive to Kingfisher, as well as adding new stores and digital channels.

The company, which has 856 stores worldwide, including 330 B&Q outlets in the UK, has said it believes there is potential for more than 1,100 stores over the long term, including more in Russia and China. Kingfisher had a strong 2011, despite a drop in sales of home improvement and heating products in the UK, as it enjoyed strong growth in its overseas division, which includes Castorama and Brico Depot.

High street retailer Next grappled with a disappointing Christmas, adverse weather and a consumer spending squeeze last year but is still expected to unveil higher profits.

The home and clothing chain, which has 520 stores, is forecast to report pre-tax profits between £558million and £572million in the year to January 31, compared to £551million the previous year, which at the top end would mark a 4 per cent increase.

The group has been propped up by strong growth in its online Directory business, which is forecast to deliver more than £1billion in sales for the full year, while its high street sales have struggled.

Source : ThisIsMoney.co.uk
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