Expect 'plenty of handwringing about hotter inflation' next week

By Greg Robb

Gas prices expected to boost headline consumer inflation in February

With February's confusing U.S. unemployment report in the rearview mirror, economists will analyze consumer inflation data next week to get a better idea of ​​what the Federal Reserve might do with interest rate policy.

The February jobs report had so many moving parts and revisions that it will put more weight than usual on inflation data, said Drew Matus, chief market strategist at MetLife Investment Management.

See: A tale of two labor surveys: one strong and one weak

But the data could generate more "distress" on Wall Street over fears that inflation is reaccelerating, the Oxford Economics team said in a note to clients, as a rebound in gasoline prices likely helped boost the highest inflation last month.

Here's a peak of what to expect next week in key economic data:

February CPI

Tuesday, 8:30 a.m. Eastern Time

Economists surveyed by the Wall Street Journal expect a fairly strong reading.

The headline CPI is expected to rise slightly to a 0.4% increase from a 0.3% increase in January. It would be the biggest gain since September.

Year after year, inflation is expected to remain at a rate of 3.1% for the second consecutive month.

The basic measure, which excludes food and energy, is expected to increase by 0.3%, one point less than the previous month. Year-over-year core inflation could fall to 3.7% from 3.9% in January. That would be the lowest reading since April 2021.

February IPP

Thursday, 8:30 a.m. Eastern Time

Producer prices are expected to rise 0.3% in February for the second consecutive month. This will be the first two-month increase since September.

All eyes will be on the services components, which feed the Federal Reserve's favorite inflation measure, the personal consumption expenditure index.

February Retail Sales

Thursday, 8:30 a.m. Eastern Time

Retail sales are expected to recover in February, rising 0.7%, almost completely reversing the previous month's 0.8% decline. It would be the biggest gain since September.

The gain will be led by higher gasoline prices and higher auto sales, said Scott Anderson, chief U.S. economist at BMO Capital Markets.

Excluding strong auto sales, retail sales will rise 0.4% after a 0.8% drop in January.

March Consumer Sentiment

Friday, 10:00 am Eastern Time

Consumer confidence is expected to rebound to 77.5 in March from 76.9 at the end of February. That's still down from the reading of 79 in January.

A spike in the unemployment rate and gasoline prices kept confidence limited, Oxford said.

See also: This week's top US economic reports and Fed speakers

-Greg Robb

This content was created by MarketWatch, operated by Dow Jones & Co. MarketWatch is published independently of Dow Jones Newswires and The Wall Street Journal.

 

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03-09-24 1146ET

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