jeudi 26 mars 2015
Is Inflation Returning? Inflation Expectations are Rising
Posted on 06:52 by nice news
Japan reports CPI, alongside retail sales, unemployment and overall household spending early tomorrow in Tokyo. Despite the extremely aggressive expansionary monetary policy, the BOJ has not managed to squash deflationary forces.
The BOJ has chosen to target the core rate, which in Japan excludes fresh food. The BOJ also wants to discount the sales tax increase from last April, which will be soon dropping out of the base effect. By this measure, Japan's inflation is expected to have been just above zero in February. The BOJ has warned that CPI may be flat for the next few months.
The US reported February CPI earlier this week. The Federal Reserve does not target CPI but the core PCE deflator, which typically runs a little below the core CPI measure. Still, for the second month in a row, the core CPI bested expectations. The headline rate increased for the first time in four months. There are some other anecdotal reports, like MIT's Billion Price Project (real time internet prices), warn of some creeping upside pressure to prices. Meanwhile, the May gasoline futures contract is up about 24% off the mid-January low and the CRB index is up more than 5% from last week's 6-year low.
The eurozone reported February consumer prices last week. The 0.6% increase in the headline rate was the largest since last March. The core rate ticked up to 0.7%, which is where it was throughout Q4 14 before dipping to 0.6% in January. Next week Germany and Spain will report preliminary March figures (March 30) ahead of the eurozone preliminary estimate the following day. We anticipate a small increase in both the headline and core rates.
One of the reasons official worry about deflation is that it could potentially deter consumption as households anticipate lower prices. While this seems logical, the evidence for this is poor. Spain good example of this. On the EU harmonized basis, Spain has among the
The BOJ has chosen to target the core rate, which in Japan excludes fresh food. The BOJ also wants to discount the sales tax increase from last April, which will be soon dropping out of the base effect. By this measure, Japan's inflation is expected to have been just above zero in February. The BOJ has warned that CPI may be flat for the next few months.
The US reported February CPI earlier this week. The Federal Reserve does not target CPI but the core PCE deflator, which typically runs a little below the core CPI measure. Still, for the second month in a row, the core CPI bested expectations. The headline rate increased for the first time in four months. There are some other anecdotal reports, like MIT's Billion Price Project (real time internet prices), warn of some creeping upside pressure to prices. Meanwhile, the May gasoline futures contract is up about 24% off the mid-January low and the CRB index is up more than 5% from last week's 6-year low.
The eurozone reported February consumer prices last week. The 0.6% increase in the headline rate was the largest since last March. The core rate ticked up to 0.7%, which is where it was throughout Q4 14 before dipping to 0.6% in January. Next week Germany and Spain will report preliminary March figures (March 30) ahead of the eurozone preliminary estimate the following day. We anticipate a small increase in both the headline and core rates.
One of the reasons official worry about deflation is that it could potentially deter consumption as households anticipate lower prices. While this seems logical, the evidence for this is poor. Spain good example of this. On the EU harmonized basis, Spain has among the
Is Inflation Returning? Inflation Expectations are Rising
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