Key events in EMEA and Latam next week

After falling in May, we expect retail sales to rebound in June. The question remains whether the recent slower growth comes from a higher savings rate due to new retail bonds and fears of a recession or if this is a sign of underlying weakness. At the same time, optimism in manufacturing seems to be fading in light of the deteriorating external environment. This is dragging down the manufacturing PMI, which is still expanding but at a slower pace. Meanwhile, worsening data from the eurozone economy and lower oil prices may cause a decline in the PPI. Decelerating consumption and producer prices could confirm the central bank's view that no rate hike is necessary.

Inflation decelerated to 2.7% in June as expected and is about to slow even further in the months ahead due to base effects. Though tax changes might push headline CPI higher (close to 2.5% again) next year, core inflation should move below the 2% target in mid-2020. This means the Czech National Bank should refrain from tightening and remain on hold, mainly due to current global uncertainty, underlined by recent manufacturing weakness in Germany. The new forecast should be similar to the previous one, as Board member Ales Michl revealed in a recent Bloomberg interview. As such, no surprise from the CNB is expected next Thursday.