Retail inflation at 4-month low of 4.44 per cent

Galtero Lara
Marcha 14, 2018

Airline fares rose 0.6% on the month but were down 5.4% on the year, while the cost of wireless telephone services dropped 0.5% from January and are down 9.4% from February 2017. Food Price Index part of CPI also declines from 4.7 to 3.3 percent. The S&P 500 increased 12.68 points, or 0.46 percent, to 2,795.70. Economists expected a 2.3% increase in overall inflation and core prices to rise 1.9%. The index for all items less food and energy rose 1.8 percent over the past year, while the energy index increased 7.7 percent and the food index advanced 1.4 percent.

The dollar index, which measures the greenback against a basket of currencies, was up 0.2 per cent. Investors should also keep in mind Industrial Production numbers will come from China early tomorrow, and Germany will release potentially intriguing CPI numbers on Wednesday. It is expected to show an increase of 0.2%, well below last month's 0.5% increase.

On Wednesday, the Labor Department is scheduled to release a separate report on producer prices in the month of February. 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. Policymakers consider the labor market to be near or a little beyond full employment.

"It is good and much lower than our expectation of 5 percent".

The yen tends to suffer in an environment when riskier and higher-yielding assets are bid but Morgan Stanley strategists said in a note that a further deterioration in the political situation that affected the position of Abe, could see the yen "forcefully return towards its previous upward trend". "With core PCE prices still comfortably below target, the Fed has no reason to get any more aggressive on rate hikes than its current dot plot forecast already builds in".

Analysts expect food inflation to rise because of the seasonal upturn in vegetable prices in summer, an increase in minimum support price of summer crops that will reflect with a lag, and an upswing in global wheat prices.

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The core CPI was restrained by a moderation in rents. The cost of motor vehicle insurance rose by a record 1.7 percent last month.

Households also paid less for healthcare.

Emerging market stocks rose 0.13 percent.

Used auto and trucks prices dropped after four straight monthly increases and the cost of airline fares rebounded after falling in February.

Apparel prices continued to march higher, rising 1.5 percent in February after surging 1.7 percent in January.

Interms of industries, sixteen out of the twenty-three industry groups in the manufacturing sector have shown positive growth during the month of January 2018 as compared to the corresponding month of the previous year.

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