US CPI: Core inflation slows a touch - Wells Fargo

Mae Love
March 14, 2019

India's industrial output growth stood at 1.7 per cent in January, mainly on account of slowdown in the manufacturing sector, while retail inflation rose to a three-month high of 2.57 per cent in February. The Reserve Bank of India (RBI) factors in retail inflation while deciding its monetary policy.

According to analysts, the consumer price index (CPI) inflation data for the month of February is expected to harden while IIP data for January is expected to soften.

Accordingly, the Consumer Food Price Index (CFPI) in the month under review stood at (-) 0.66 per cent from 3.26 per cent in Februaray 2018.

USA stock futures and Treasuries rose while the dollar fell, as the data suggest there's a greater chance that inflation won't hold up around the Fed's 2 percent objective - a development that would discourage policy makers from additional rate increases amid rising risks from weakening global growth.

The Fed has a 2 per cent target for a separate inflation gauge from the Commerce Department that's linked to consumer spending. The CPI rose 0.2% in February, but slipped to 1.5% on a year-ago basis due to lower energy prices over the past year.

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One area where inflation did pick up was food prices, which rose 0.4% on the month.

The Ministry of Statistics and Programme Implementation (MOSPI) released two sets of key data on Tuesday. Such figures give President Donald Trump another opportunity to claim credit for lower pharmaceutical prices, an issue that he's recently tweeted about several times.

In the 12 months through February, the core CPI rose 2.1 per cent. That index tends to run slightly below the Labor Department's CPI, and January figures are due March 29. WPI inflation stood at 2.74 per cent in March 2018. Food consumed at home rose 0.4 per cent last month, boosted by more expensive dairy products, fresh vegetables, cereals and meat. Electricity growth at 0.8 per cent was at 43-months low. The central bank also changed its policy stance to "neutral" from "calibrated tightening". Annual wage growth jumped 3.4% in February, the biggest increase since April 2009, from 3.1% in January.

A New York Fed survey of consumer expectations published on Monday showed a drop in inflation expectations in February. But excluding food and fuel costs, the core CPI fell short of a forecasts, rising only 0.1 percent. Prices fell for new (-0.2 m/m%) and used (-0.7% m/m) vehicles, prescription drugs (-1.0% m/m), and recreation (-0.4% m/m).

But consumers got some relief from healthcare costs, which fell 0.2 percent after five straight monthly increases.

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