Published: Thu, March 14, 2019
Economy | By

Slowing economy reining in US inflation

Slowing economy reining in US inflation

USA consumer prices rose for the first time in four months in February, but the pace of the increase was modest, resulting in the smallest annual gain in almost 2½ years.

Today, we have an all-important release of US CPI data for the month of February and as we get close to the decision timings, here are the expectations as forecasted by the 8 major banks for the upcoming inflation data.

The index tracking the cost of gasoline rose 1.5 percent in February, following three consecutive monthly declines. That index tends to run slightly below the Labour Department's CPI, and January figures are due March 29.

The Food inflation based on CPI, however, was in negative at 0.66 per cent. Food costs were up 0.4 percent, their largest monthly increase since May 2014, as both the food at home and food away from home indexes increased.

Prices of milk-based products rose marginally by 0.92 per cent, while egg became dearer by 0.86 per cent, and meat and fish prices recorded a rise of 5.92 per cent. A poll by Reuters economists had predicted consumer price index at 2.43 per cent for February.

USA stock futures and Treasuries rose while the dollar fell. The dollar pared gains against the yen and extended losses against the euro.

The public's inflation expectations fell in February, according to the Federal Reserve Bank of New York's latest Survey of Consumer Expectations.

Fed Chairman Jerome Powell made clear Friday that he and his colleagues are in no hurry to adjust interest rates as growth slows and inflation stays subdued.

The means the Fed is even more likely to hit the pause button on additional interest rate hikes for the rest of 2019. The January PCE price data will be released on March 19 after being delayed by a 35-day partial shutdown of the federal government that ended on Jan. 25. It was delayed by a 35-day partial shutdown of the federal government that ended on January 25. A separate Labour Department report on Wednesday showed that average hourly earnings, adjusted for inflation, rose 1.9 per cent in February from a year earlier. Owners-equivalent rent, one of the categories created to track rental prices, rose 0.3%, as did rent of primary residence.

Energy prices rose 0.4 percent, the first increase in four months, as gasoline prices advance 1.5 percent. They were held down by a 1.0 per cent decline in the price of prescription medication and a 0.7 per cent drop in the cost of hospital services. The two lead indicators of IIP - primary goods (1.4 per cent) and intermediate goods (-3 per cent) - portray a weak industrial growth profile.

In contrast, output of consumer non-durables rose by 3.8 per cent and that of consumer durables by 1.8 per cent.

Prices for new motor vehicles, used cars and trucks, as well as recreation fell.

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