INFLATION figures will provide the main economic focus this week, while supermarket heavyweights Tesco and Sainsbury’s go head-to-head as the UK grocers reveal their first-quarter trading updates.

The consumer prices index rate of inflation is expected to have held last month after a bigger-than-expected bounce the previous month.

Inflation should remain at 4.5 per cent in figures published tomorrow after it rose from four per cent in April to its highest level in more than two years. But the April spike was mainly put down to duty rises in the Budget and soaring air fares.

A stagnant inflation figure should relieve some pressure on the Bank of England to raise interest rates from record lows of 0.5 per cent, but analysts and the bank itself still expect inflation to hit five per cent later this year.

But as economic indicators suggest the recovery is faltering, analysts do not expect the Bank of England to raise rates until November at the earliest.

Tesco and Sainsbury’s are expected to report a boost to sales in April from the warm weather and the extra bank holiday for the royal wedding.

Tesco, the biggest supermarket in the UK, has struggled to push sales any further here. The company has turned to its fast-growing Asian business to offset its weaker domestic market – but the City will be keen to see what plans it has to boost sales at home.

At its annual results, the retailer promised new products and services after revealing a 0.7 per cent drop in fourthquarter UK like-for-like sales, excluding VAT and fuel.

Analysts at Nomura have predicted a 1.2 per cent increase in like-for-like sales for the first quarter, excluding fuel but including VAT. The City will want an update on Tesco’s US business – Fresh & Easy – after its losses widened to a worse-than-expected £186m in the year to February.

Sainsbury’s, the third biggest supermarket in the UK, outperformed the market in the last financial year, posting strong like-for-like sales and profit growth. The retailer’s market share also grew, creeping closer to number two rival Asda.

The supermarket has focused on growing non-food sales and has rolled out a rapid expansion programme, opening larger supermarkets, and building on its Sainsbury Local convenience store estate.

The grocer reported a bigger- than-expected slowdown in its final quarter, in the ten weeks to March 19, but analysts expect this to have reversed in the first three months of its financial year.

Royal Bank of Scotland has forecast like-for-like sales growth, excluding VAT and fuel, of one per cent. Consensus figures for same-store growth, including VAT but excluding fuel, are about two per cent.

􀁧 Companies reporting this week include: Today – Finals: Majestic Wine.

Tomorrow – Finals: Carphone Warehouse, Park. Trading updates: Air Partner, Tesco.

Wednesday – Trading update: Sainsbury’s.

Thursday – Finals: Ashtead, Mulberry, WS Atkins.