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The focus of attention in the UK this week will be on February's retail price index released on Thursday. In Januar...
The focus of attention in the UK this week will be on February's retail price index released on Thursday. In January there was no change month on month in the headline rate. The increases in Budget excise duties, fares, travel costs and seasonal foods were offset by sizeable price discounts in the January sales.

February looks less subdued with the market expecting a monthly increase of about 0.7%, taking annual growth to 3.5%.

The extent of price rises will depend on how fast January's sales reductions were reversed in February, the impact of a mortgage rate rise, and whether companies are trying to improve their profit margins by raising prices as suggested by the CBI Industrial Trends surveys.

January's survey showed that price expectations in food manufacturing were up sharply, and this may be reflected in higher food prices last month.

Also released in the UK this week is the Non-EU trade figure for February. Recent figures have been significantly effected by special factors including the import, auction, and subsequent re-export of valuable works of art.

In December a deficit of £913bn reflected artwork imports worth £200m, and the January figure of £303m was probably distorted to a similar extent as they were re-exported. Distortion also came with the changing definition of non-EC following the accession of Sweden, Finland and Austria to the EC.

Excluding these distortions the trend appears to be for a slight worsening of the deficit. However, the latest CBI survey suggests that British manufacturers are seeing their highest level of export demand for 18 years.

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