A report on inflation takes center stage in this week’s economics news, with investors eager to see if a sharp jump in January that stoked fears of higher interest rates continued in February. Also on tap: the latest data on retail sales, housing starts and industrial production.
Tuesday, the Labor Department releases its closely-watched consumer price index. Consumer prices climbed a hefty 0.5% in January and a core measure that excludes volatile food and energy items rose 0.3%, the most in a year. The news fanned concerns that the Federal Reserve will hike interest rates this year more than the three times it has forecast. The January jobs report already had stirred inflation worries and spooked markets by featuring the largest increase in average hourly wages since 2009. But the February employment report on Friday showed pay increases moderating and the fresh inflation data could follow suit. While rent probably increased moderately, airline fares likely dipped, says Nomura economist Lewis Alexander. Economists estimate that overall and core inflation both rose 0.2%, nudging total annual inflation to 2.2% from 2.1% and keeping the core reading steady at 1.8%.
Retail sales helped power consumer spending and the economy in 2017 but sales were flat in December and fell 0.3% in January, the largest decline in nearly a year. Economists don’t expect the slump to persist. The recently passed tax cuts, which began showing up in workers’ paychecks last month, likely boosted spending, Alexander says. And job and income growth have remained sturdy. Auto sales slowed in February amid rising interest rates, Alexander notes, but other sectors have performed well. Economists expect the Commerce Department on
Wednesday to record a solid 0.2% rise in retail sales and a 0.4% increase in a core measure that excludes volatile categories such as autos and gasoline.
Friday, Commerce announces last month’s housing start totals. Starts leaped 9.7% in January but that followed a weather-related decline in December. Housing demand is strong and supplies are low, a combination that’s expected to lift home construction. But the growth in starts has been tempered by construction worker shortages, rising material costs and limited lot availability. So after January’s strong gain, economists are forecasting a 3.1% drop in February to a seasonally adjusted annual rate of 1.29 million.
Industrial production has enjoyed a resurgence rooted in a strong global economy and a rebound in oil drilling activity. While the warm weather likely damped utility output last month, factory and oil production probably picked up. After production dipped 0.1% in January, economists are looking for the Fed to report a solid 0.3% rise in February.
Source : http://www.msn.com/en-us/news/msn/consumer-price-index-report-did-inflation-climb-higher-or-ease-in-february/ar-BBK8aVh559