U.S. consumer prices rise marginally, core CPI firming
U.S. consumer prices barely rose in October as the boost to gasoline prices from hurricane-related disruptions to Gulf Coast oil refineries were unwound, but rising rents and healthcare costs pointed to a gradual buildup of underlying inflation. The Labor Department said on Wednesday its Consumer Price Index edged up 0.1 percent last month after jumping 0.5 percent in September. That lowered the year-on-year increase in the CPI to 2.0 percent from 2.2 percent in September. Economists polled by Reuters had forecast the CPI nudging up 0.1 percent in October and rising 2.0 percent on a year-on-year basis. Gasoline prices fell 2.4 percent after surging 13.1 percent in September, which was the largest gain since June 2009. September’s jump in gasoline prices followed Hurricane Harvey, which struck Texas in late August and disrupted production at oil refineries in the Gulf Coast region. Food prices were unchanged after nudging up 0.1 percent in September. Excluding the volatile food and energy components, consumer prices rose 0.2 percent in October amid a pickup in the cost of rental accommodation, healthcare costs, tobacco and a range of other goods and services.
Euro soars on strong economic growth in Germany
The euro rose to a 2-1/2 week high against the U.S. dollar on Tuesday and was on track for its largest percentage gain in more than four months, after data showed Germany’s economy shifted into a higher gear in the third quarter. The euro was up 1.11 percent at $1.1794, set for its largest one-day percentage gain against the greenback since June 27. “Most of what appears to have driven the euro’s strength was the solid German data earlier this morning,” said Eric Viloria, currency strategist at Wells Fargo Securities in New York. Germany’s seasonally adjusted gross domestic product (GDP) rose by 0.8 percent on the quarter, compared with a Reuters poll forecast of 0.6 percent. In a further positive sign for Europe’s biggest economy, the ZEW institute said investor morale improved in November and prospects for the economy remained “encouragingly positive.” Germany helped the euro zone economy expand by 2.5 percent in the September quarter compared with the same period in 2016, and more than the United States, data showed on Tuesday.
Power costs lift Brazil consumer prices by the most in 8 months
High power costs lifted Brazil’s consumer prices in October by the most in eight months, alleviating concerns that it could undershoot the official year-end target. The IPCA index rose 0.42 percent from September, up from 0.16 percent the month before, government statistics agency IBGE said on Friday. Annual inflation reached 2.70 percent, still below the bottom-end of the central bank’s target range of 4.5 percent plus or minus 1.5 percentage points but far above 18-year lows seen earlier this year. Economists polled by Reuters had forecast readings of 0.47percent and 2.75 percent, respectively. Scarce rains drove regulators to hike electricity rates in a bid to offset reduced hydropower generation. Analysts expect power costs to remain high in coming months, driving several forecasters to revise up their 2018 inflation forecasts. Meanwhile, food prices fell only 0.05 percent in October from September, the lowest decline since April, suggesting a months-long period of food deflation may be coming to an end. But the uptick in inflation in October is unlikely to prevent the central bank from cutting interest rates to all-time lows, as it faces subdued wage growth and abundant idle capacity. A weekly central bank survey of economists put the benchmark Selic interest rate at 7 percent by year-end 2018. The top five most precise estimates, however, expect the central bank could cut it as low as 6.5 percent in February, after leaving the door open for further reductions.