The consumer price index slated for release Wednesday is at risk to be higher than the consensus forecast.
If so, this would indicate rising inflation in the United States, at least to the eye of the reader. But in a weakening economy, many believe inflation does not exist, and therefore will be quick to dismiss CPI warning signs.
Consensus figures for the CPI are forecast at a 0.3 percent rise for the headline figure and 0.2 percent for the core figure. Medical care, prescription drugs, services and housing will likely continue to outpace the core rate, said Paul Kasriel, senior vice president of economic research with Northern Trust Corp.
Some look to last Friday’s producer price index as an indicator of the CPI. The PPI jumped 1.1 percent, well beyond the forecast for a gain of 0.2 percent.
The unexpected sharp rise in U.S. headline and core producer prices in January was bolstered by surprise increases in cigarette and new-car prices.
However, PPI increases typically don’t have an effect on the CPI until a few months later, Kasriel said. Still, the numbers are expected to rise Wednesday.
