Worries about inflation are on the front burner again, after Friday’s bigger-than-expected jump in the producer price index.
The January consumer price index from the Labor Department, due out Wednesday, will be the most anticipated report of the week, said Anthony Chan, senior economist at J.P. Morgan Fleming Asset Management in Columbus, Ohio. The consumer price index is a widely used gauge of inflation.
“Expectations for the [consumer price index] will rise, but more importantly, financial markets will be watching closely to see if we turned the corner on inflation,” Chan said.
He forecasts a 0.1 percent rise in the consumer price index and a 0.3 percent gain in the so-called core index, which excludes volatile food and energy prices.
“We’ll see whether or not all the big components of the [producer price index] will carry into the [consumer price index],” he said.
This week, investors will zero in on the core consumer price index. Will it mirror some of the effects of the producer index? Historically, we usually don’t see an exact translation with the two reports, he said.
But if we see a rise in the consumer index, “these two reports will validate the fact that the economy is improving,” Chan said.
Economists forecast that the preliminary figure for fourth-quarter gross domestic product, due out Friday, will show that the economy grew at an annual rate of 3.7 percent, according to a Bloomberg News report. That would be up from the advance figure of 3.1 percent announced last month.
Increased homebuilding, additions to inventories and more exports late last year helped boost growth, recent statistics showed.
Also due out this week is a report on durable goods orders in January. Economists are looking for a 0.1 percent increase. That would be the gauge’s third straight gain, the first time that’s happened since the first quarter of 1999.
