Monday starts quietly, with the U.S. observing a bank holiday for Martin Luther King Jr. Day but Canada will get its inflation data prints. On Tuesday, the U.K. will release the claimant count change, the average earnings index 3m/y, and the unemployment rate.
Wednesday brings inflation data from the U.K. while Thursday Australia will publish its employment change and unemployment rate. In the U.S., attention will turn to the core PCE price index m/m, along with October PCE data and final GDP q/q. New Zealand will also release its inflation figures.
Finally, on Friday, the Bank of Japan will announce its monetary policy decision, while the Eurozone, the U.K., and the U.S. will get their flash manufacturing and services PMI data.
This week will also include the World Economic Forum’s annual meetings in Davos.
In Canada, the consensus for CPI m/m is -0.4% versus 0.1% previously. Median CPI y/y is expected to ease to 2.7% from 2.8%, trimmed CPI y/y is also seen slipping from 2.8% to 2.7%, while common CPI y/y is likely to remain unchanged at 2.8%.
The Bank of Canada will closely monitor this release to assess whether inflation pressures remain above its 2% target. Headline CPI is still expected to print above target, while underlying price pressures are likely to show only modest improvement, with core inflation remaining relatively firm.
Some relief is expected from energy prices, particularly due to lower gasoline costs, which should push energy inflation further into negative territory. However, analysts caution that this easing could be offset by continued strength in food prices, which remain elevated and may be boosted by base effects linked to last year’s temporary tax measures. Grocery inflation, in particular, continues to run hot.
Overall, inflation excluding food and energy is expected to trend lower, though it will likely remain above the Bank’s target, indicating that price pressures are easing only gradually. From a monetary policy perspective, the BoC is expected to keep rates unchanged for now, with markets anticipating that the next move will be a rate hike, though not this year.
In the U.K., the consensus expects the claimant count to rise by 18.8K versus 20.1K previously. The average earnings index 3m/y is forecast at 4.6%, down from 4.7%, while the unemployment rate is expected to edge lower from 5.1% to 5.0%.
This week’s labour market data is likely to reinforce the Bank of England’s cautious stance on rate cuts. While a modest decline in the unemployment rate is anticipated, analysts view this as temporary and expect wage growth to continue easing. If confirmed, these trends could open the door for further policy easing, potentially as early as March.
For U.K. inflation, the consensus expects headline CPI to rise from 3.2% to 3.3% y/y, with core CPI also edging up from 3.2% to 3.3%.
ING analysts note that this release will hinge heavily on airfares, which typically rise over the holiday period. Last year’s seasonal increase was unusually muted, so a more typical Christmas-related jump in ticket prices this time could push services inflation higher.
The magnitude of the move will depend on the timing of the ONS price collection, creating a small risk of a temporary spike that would likely reverse in January but could appear uncomfortable for the Bank of England in the near term.
Food prices will also be important to watch, as they pose a short-term upside risk. However, trends in other European countries continue to point toward easing price pressures. Overall, ING expects U.K. inflation to return toward the BoE’s 2.0% target around April.
In Australia, the consensus expects employment to rise by 26.5K, following a decline of 21.3K previously, while the unemployment rate is forecast to edge up from 4.3% to 4.4%.
November employment data came in weaker than expected, with a notable drop that extended a run of softer job growth in recent months. On a three-month basis, employment gains have slowed to a pace well below historical norms, reinforcing the view that labour market momentum is easing.
Seasonal volatility around the summer period has also become more pronounced in recent years, reflecting post-pandemic shifts in leave patterns that continue to complicate seasonal adjustments.
Against this backdrop, the latest result should be viewed as part of a gradual cooling rather than a sharp deterioration. Westpac analysts expect a modest rebound in December, with employment likely to recoup some of November’s decline. Even so, underlying trends point to continued moderation rather than a return to strong hiring.
Despite November’s weak employment outcome, the unemployment rate did not rise. Instead, a small decline in the number of unemployed reflected a drop in labour force participation, which slipped to 66.7% and helped keep the jobless rate unchanged at 4.3%.
Looking through the month-to-month noise, however, the broader trend still suggests gradual labour market cooling, with the three-month average unemployment rate edging higher compared with earlier in the year.
Looking ahead, participation is expected to recover modestly. Combined with a rebound in employment, this would likely push the unemployment rate slightly higher to around 4.4%, marking a noticeable increase compared with a year ago and reinforcing the picture of a slowly softening labour market.
Wells Fargo analysts think that from a monetary-policy perspective the RBA is expected to keep the cash rate unchanged at 3.60% through the end of the year. Any future move is more likely to be a rate hike, but this would require a clear re-acceleration in labour market strength and persistently elevated inflation.
In the U.S., the consensus for the core PCE price index m/m is 0.2% and the release will also include October data. The report is likely to confirm that underlying inflation remains contained, even as tariff-related pressures linger.
The Fed will enter its blackout period ahead of the January 28 meeting for which current market expectation is that interest rates will remain unchanged.
In New Zealand, the consensus for CPI q/q is 0.5% vs. 1.0% previously. Inflation is expected to pick up modestly in the December quarter, with consumer prices likely rising by around 0.5%, leaving the annual inflation rate broadly unchanged at roughly 3.0%.
The quarterly increase is expected to be driven mainly by higher fuel costs and typical seasonal rises in travel and accommodation prices, partly offset by a seasonal decline in food prices. Beneath the headline, underlying inflation pressures have continued to ease over the past year, with most core measures now sitting within the 2–3% range.
At this week’s meeting, the BoJ is expected to keep rates unchanged at 0.75%. As a reminder, last year the Bank delivered two rate hikes, lifting borrowing costs to levels not seen in decades.
There were hints in December that an additional rate hike could be forthcoming, but the conditions for further tightening were not met, as incoming data points since then have been mixed.
Inflation in Japan remains a concern, as it is still running above the BoJ’s target. However, uncertainty around wage dynamics, particularly following a softer-than-expected November reading, has clouded the timing of the next move, especially if this weakness persists.
At the same time, renewed yen depreciation has added another layer of complexity, particularly amid political uncertainty that could lead to looser fiscal policy and higher government spending. A weaker currency risks pushing up prices for imported goods, which could weigh on household spending.
For now, the BoJ is expected to keep rates on hold in the near term, though risks appear skewed toward an earlier move and potentially a more aggressive tightening cycle if inflation pressures continue.
