March 13, 2018
U.S. Inflation Picked Up in February Without Any Big Acceleration
U.S. consumer prices continued to firm in February, indicating inflation is creeping up toward the Federal Reserve’s target without the kind of breakout that would warrant a faster pace of interest-rate hikes. Both the main consumer price index and the core gauge, which excludes food and energy, rose 0.2 percent from January, matching the median estimates of economists, a Labor Department report showed Tuesday. The CPI was up 2.2 percent in the 12 months through February, compared with 2.1 percent in January, while the core index increased 1.8 percent from a year earlier for a third month. The data indicate inflation is gradually picking up without any big acceleration. That’s in line with policy makers’ outlook for price gains steadily approaching their goal and officials’ projection for three interest-rate hikes this year, including one anticipated at the Fed’s meeting next week. The lack of an upside surprise on the CPI figures may help calm a market that remains on edge after data released in February showed wages and prices rising faster than anticipated, leading investors to sell stocks on concern the Fed would raise interest rates more aggressively. Fed officials target 2 percent annual inflation based on a separate index, the Commerce Department’s gauge linked to consumer spending. Price increases have largely remained below that goal in recent years.
Pork Pies Out, Leggings In as U.K. Unveils New Inflation Basket
U.K. statisticians are whipping the nation’s inflation measure into shape, kicking out pork pies and adding women’s exercise leggings in their annual review of the basket used to calculate living costs. Action cameras, raspberries, quiche and prepared mashed potato have all been added to the list of 714 items statisticians use to gauge the measure, while Edam cheese and leg waxing have been removed, the Office for National Statistics said Tuesday. The new basket reflects the changing nature of children’s play, with adult-supervised soft play sessions also being added, while “sit and ride toys” replace tricycles. Grown up habits are also considered, with media players such as Chromecast and Apple TV supplanting digital TV recorders and Freeview boxes. A “bottle of lager in a nightclub” is removed, following the 2016 departure of nightclub admissions from the basket. The pound’s drop since the Brexit vote has pushed U.K. inflation to 3 percent, well above the Bank of England’s target. Faster price growth was a major reason behind officials’ decision to hike interest rates for the first time in more than a decade last year, and investors are betting the next move could come as soon as May.
Asian Stocks Rebound With Japan as Investors Turn to CPI Data
Asia’s benchmark equity index rebounded with Japanese shares as investors turned their focus to U.S. inflation data expected later Tuesday — the last major piece of data that may give clues on the pace of policy tightening ahead of the Federal Reserve’s meeting next week. The MSCI Asia Pacific Index added 0.2 percent as of 4:22p.m. in Hong Kong for its fourth day of gains — after posting its biggest single day gain in 16 months Monday — with gauges of real estate and technology companies leading the advance. Japan’s Topix index rose 0.6 percent, reversing early losses and the yen weakened as investors weighed the impact of a land-sale scandal entangles Prime Minister Shinzo Abe, his wife and the finance minister. After a strong start on Hong Kong’s Hang Seng Index, the benchmark closed flat. “Once again, we are staring in the face of the CPI event risk and positioning ahead of the release in US equity indices certainly reflected some degree of cautiousness,” writes Jingyi Pan, a market strategist at IG Asia Pte. in a note.