British traders await key inflation numbers

Inflation data due next Tuesday is the key British event for London stock market traders next week amid uncertainty about the outlook for consumer prices over the coming months. Next week also sees a number of trading updates from major British companies listed on London's FTSE 100 index, including from publishing group Pearson and brewer SABMiller.
The FTSE 100 index added 0.30 percent over the past week to finish on Friday at 6,002.07 points. Ahead of the official inflation numbers for December, investors on Friday digested figures showing that the price of goods leaving British factories rose last month by the largest amount since April.
"The data show mounting inflationary pressures in the supply chain, adding to the Bank of England's problems and increasing pressure for an interest rate hike sooner rather than later," said economist Howard Archer of consultancy IHS Global Insight.
"While our central forecast remains for the Bank of England to hold off from raising interest rates until the fourth quarter given likely markedly slower growth over the coming months as the fiscal squeeze increasingly bites, the risk of a move before then is mounting. "Much will depend on whether there is increasing evidence that current higher inflation is feeding through to have significant second-round effects, most notably by pushing up wage growth," Archer added on Friday.
The Bank of England left British interest rate at a record low 0.50 percent for a 22nd month in a row on Thursday despite concerns over high inflation and as Britain faces tough economic times in 2011.
The central bank's monetary policy committee also opted against changing its stimulus programme, under which the BoE has already pumped £200 billion (238 billion euros, $315 billion) into the economy since 2009.
Economists said that the bank was eager to dampen inflation - but did not want to risk placing the nation's economic recovery in danger.
The bank had been widely forecast to keep the status quo amid question marks over Britain's tentative fragile recovery, painful cuts in public spending, rising taxation - and above-target inflation. Inflation spiked to 3.3 percent in November, up from 3.2 percent in October, on the back of soaring clothing, food and oil costs. December data will be published on Tuesday.
Many experts believe that inflation could hit 4.0 percent this year on the back of domestic energy price hikes, rising commodity markets and the government's recent increase in sales tax.