A look at the day ahead in European and global markets from Vidya Ranganathan

It’s not just the heatwave. UK consumers are paying through their noses for fish and chips too, and Friday brings the next quarterly survey of their views on inflation and rates.

Back in March, consumers surveyed didn’t seem so confident the Bank of England was doing its job bringing prices down, but ironically also expected average inflation to fall in the coming months.

More recent surveys show British businesses expect to raise both output prices and wages at a slower pace over the coming year than they did a month ago.

The debate is partly moot. As Britain contends with one of the highest inflation rates among major advanced economies, the BOE seems set to hike rates a lot more.

It meets next week, and is undoubtedly at the farthest end of the hawkishness spectrum compared to the other three major central banks that met this week.

Expectations now are not just for a rate rise next week but a good 100 basis points of tightening in the next 12 months that could push the policy rate to 6% early next year.

That has put sterling on a tear. Data this week showing the labour market is running hotter than all economists polled by Reuters spurred the heaviest sell-off in gilts since last autumn’s “mini-budget” crisis, lifting two-year borrowing costs to their highest since July 2008.

Supermarket leader Tesco reports some quarterly trading numbers later in the day. The stock has soared 17% this year, but pared some gains as grocers across Europe cap some prices.

Asda, Britain’s third largest supermarket group, has frozen the prices of over 500 products until the end of August, giving consumers some hope food inflation will abate in the coming months.

Key developments that could influence markets on Friday:

The BOE releases its inflation attitudes survey

EU Finance ministers meet in Brussels

Eurozone inflation data, U.S. June University of Michigan survey, Italy April trade balance, Eurozone Q1 labour costs.

St. Louis Federal Reserve Bank President Bullard speaks in Oslo, Norway

Earnings/updates: Tesco

(Editing by Sam Holmes)

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