U.S. Price Pressures Keep Percolating in Economy: Eco Week Ahead
U.S. consumer inflation and prices paid to producers probably advanced at healthy paces in September, suggesting cost pressures continue to percolate.
The widely followed consumer price index is projected to match August’s 0.3% monthly increase and the 5.3% year-over-year gain, according to the median of economists surveyed by Bloomberg. The government’s gauge of producer prices is seen accelerating to 8.7% on an annual basis.
- For more, read Bloomberg Economics’ full Week Ahead for the U.S.
Inflation figures will be followed later in the week by a retail sales report that will help economists put finishing touches on their forecasts for third-quarter consumer spending. Purchases at retailers probably fell as auto dealers with limited inventory struggled to lure buyers. Excluding vehicles, retail sales are forecast to rise.
Meantime, the Federal Reserve is slated on Wednesday to release minutes of its September policy meeting, during which officials said they would, by the end of the year, start reducing asset purchases that have been aimed at stoking the economy. Several presidents of the Fed’s regional banks are scheduled to speak in the coming week as well.
What Bloomberg Economics Says:
“With higher inflation readings likely, attention will be on any signs of stagflationary developments -- namely, whether consumption has fallen off a cliff.”
--Anna Wong, Andrew Husby and Eliza Winger. For full analysis, click here
Elsewhere, the winner of the Nobel Prize for Economics will be revealed, U.K. data will give a reading on the health of its economy, and Chile may raise interest rates while central banks from South Korea to Morocco keep borrowing costs unchanged.
Click here for what happened last week and below is our wrap of what is coming up in the global economy.
The Bank of Korea meets on Tuesday. Most analysts expect it to hold off from hiking rates again until November, but investors will watch any dissenting votes from the board and Governor Lee Ju-yeol’s comments for clues on the bank’s tightening plans.
South Korea’s unemployment figures are due Wednesday. A report on machinery orders out the same day from Japan will give some sense of the appetite for capital spending in the world’s third-largest economy.
China releases trade data for September on Wednesday and factory and consumer inflation data on Thursday. Australia on Thursday issues jobs data for September, a month when much of the population-heavy east coast was in lockdown to contain the spread of the coronavirus.
The Monetary Authority of Singapore announces its policy decision on Thursday, with preliminary third-quarter gross domestic product released the same day.
- For more, read Bloomberg Economics’ full Week Ahead for Asia
Europe, Middle East, Africa
A week that begins with the announcement of the Nobel Prize for Economics will shift to focus on the health of the U.K. economy. The release of U.K. GDP data on Wednesday should show a seventh consecutive month of gains, albeit growth that’s been punctuated by volatility as the country exited lockdowns.
Similarly, while the labor market report the previous day may show more improvement, that could yet be colored by setbacks in future releases after Boris Johnson’s government ended furloughs last month.
Meanwhile in the euro zone, declines in industrial output seen in German data last week are likely to translate into a drop for the region’s aggregate production number for August. That malaise could continue after factory orders in Europe’s biggest economy also slumped.
European Central Bank policy makers will be on hand this week to offer thoughts on the state of the recovery, from Chief Economist Philip Lane to Bank of France Governor Francois Villeroy de Galhau.
Further afield, Morocco’s central bank is set to announce its interest-rate decision on Wednesday after delaying last month’s meeting for unspecified health reasons. Holding at a record low is thought likely as inflation remains subdued and King Mohammed VI lays out his economic plans following September elections.
Dubai CPI data could tip into positive figures for the first time in more than two years. Inflation figures for Egypt on Sunday may show a mild acceleration caused by food prices, while such statistics from Ghana on Wednesday are expected to show price increases at the top of the central bank’s 6% to 10% target range.
On Thursday, Uganda will likely hold its key interest rate steady to support the economy as core inflation remains well below its medium-term target of 5%.
Nigerian data on Friday will probably show inflation slowed for a sixth month while remaining at almost double the 9% ceiling of the central bank’s target band. Policy makers are likely to keep the interest rate unchanged next month after Governor Godwin Emefiele said they will only start adjusting policy when the recovery is on a sustainable path.
- For more, read Bloomberg Economics’ full Week Ahead for EMEA
August industrial and manufacturing figures Tuesday out of Mexico should underscore the uneven, stop-and-go nature of the recovery and fall short of July’s pace.
Chile’s economy is too hot -- and inflation is above the 3% target and rising -- so analysts expect a 75-bps interest rate increase Wednesday that would put the key rate at 2.25%. The central bank sees year-end inflation of 5.7% as output expands as much as 11.5% in 2021.
On Thursday, Banxico posts the minutes of its Sept. 30 meeting, where it delivered a third straight quarter-point interest rate increase to put the key rate at 4.75%. Since the decision consumer prices have drifted higher to 6%, 300bps over target.
Look for the September readings of Argentina’s national and greater Buenos Aires consumer prices to edge up after some considerable slowing since the first quarter.
Surprisingly weak industrial production and retail sales readings for August out of Brazil suggest the proxy GDP data for the same month posted Friday may revert back to early 2021 levels.
- For more, read Bloomberg Economics’ full Week Ahead for Latin America
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