(Bloomberg) — U.S. inflation likely moved sideways at best in October, highlighting the uneven trajectory of easing price pressures at home toward the Federal Reserve’s target.
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The main consumer price index, due out on Wednesday and which excludes food and energy, is likely to have risen at the same pace on both a monthly and annual basis compared to September’s figures.
The headline CPI is likely to have risen 0.2% for a fourth month, while the year-on-year measure is expected to have accelerated for the first time since March.
“October’s CPI report will likely support the idea that inflation’s last mile back to target will be the hardest,” Wells Fargo & Co. economists Sarah House and Aubrey Woessner wrote in a report. “Excluding the more volatile energy and food components, the disappearance of pandemic-era price distortions has proven frustratingly slow.”
They added that prices of core goods likely rose again in October, partly due to higher demand for cars and auto parts after Hurricanes Helene and Milton. Evacuation orders due to the storms also forced more people to stay in hotels, continuing the “glacial slowdown” in service prices.
What Bloomberg Economics says:
“We expect both CPI and PPI to soar, pushing long-term interest rates even higher – and further constraining the economy over the next few months. We expect retail sales in the control groups to slow and the unemployment rate to continue rising, reaching 4.5% by the end of the year.”
—Anna Wong, Stuart Paul, Eliza Winger, Estelle Ou, Chris G. Collins, economists. For a full analysis, click here.
Still, “the story is very consistent, with inflation continuing to decline on a bumpy path,” and one or two bad reports won’t change that pattern, Fed Chairman Jerome Powell said Thursday after the central bank cut rates by a quarter. quarter point.
The US government will also release data on wholesale inflation next week, which is likely to have increased after a stagnation in September. Meanwhile, earnings growth, which continues to outpace inflation, is likely to have contributed to another significant increase in retail sales, according to figures due out on Friday.
On Tuesday, Fed Governor Christopher Waller will speak at a banking conference before the central bank releases its latest Senior Loan Officer Opinion Survey. Powell is scheduled for an event later this week, while New York Fed President John Williams and Dallas Fed President Lorie Logan are also on the calendar.
In Canada, home sales data for October will show whether central bank rate cuts are starting to shake the sluggish housing market.
A busy week for data elsewhere includes a raft of economic data from China, wage and growth statistics in the UK, and multiple inflation numbers from India to Argentina. New forecasts from the European Union will also be published.
Click here for what happened last week, and below is our summary of what’s going to happen in the global economy.
Asia
A burst of data from China could show that the economy’s performance improved marginally in October, with industrial production, fixed asset investment and retail sales all picking up slightly as the downturn in real estate investment eases.
Still, the data will underscore the need for the broad stimulus measures undertaken since late September as President Xi Jinping looks to achieve his growth goals.
The set of Chinese data comes at the end of the week, the same day Japan is expected to report that its economic growth slowed to an annualized 0.6% in the three months through September.
Inflation in India is expected to rise to 5.72% in October, while industrial production is expected to pick up in September, according to figures due on Tuesday.
Australia will receive surveys on consumer and business confidence on Tuesday and will publish some labor market statistics later this week.
The third-quarter wage price index is due Wednesday, and other employment statistics for October will be released a day later. Indonesia reports trade data on Friday.
Among central banks, the Bank of Japan is publishing a summary of views from its October meeting when it kept rates steady, and Reserve Bank of Australia Governor Michele Bullock will appear on a panel on Thursday, while policy-setting colleague Brad Jones does the same a day later. .
Europe, Middle East, Africa
Britain will be in the spotlight following Thursday’s Bank of England rate cut, which came with a warning about the inflationary impact of the recent budget. Governor Andrew Bailey will deliver a speech on Thursday.
Wages figures on Tuesday may show slightly slowing wage growth, offering limited reassurance to policymakers. A release on Friday is likely to show that economic growth weakened to 0.2% in the third quarter, compared with 0.5% in the previous three months, according to economists.
Other countries with initial GDP figures for the same period include Poland on Thursday and Switzerland on Friday.
On the eurozone front, Tuesday’s German ZEW index will provide a glimpse into investor sentiment at a time when Europe’s largest economy is still struggling to shake off the industrial slump, and now also faces the prospect of early elections.
On Wednesday, eurozone industrial production will reveal the state of industry at the end of the third quarter, and a second estimate of GDP will be released at the same time. The European Commission in Brussels will publish new economic forecasts for the region at the end of this week.
The European Central Bank will publish a report from its October meeting on Thursday, potentially offering hints at officials’ thinking on their December decision. Vice President Luis de Guindos, who will speak in Madrid the same day, is one of several officials scheduled to speak.
In Sweden, the minutes of the Riksbank’s decision to step up easing with a half-point interest rate cut will be released on Wednesday, followed by the financial stability report a day later.
On Wednesday, data in Russia is likely to show that the economy contracted in the third quarter – for the first time since war-related fiscal stimulus began boosting activity in late 2022. Bloomberg Economics forecasts that GDP in the three countries fell by 0.3% to 0.5%. months through September.
Russia is among a number of countries that publish inflation data. Here’s an overview:
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On Sunday, Egyptian monetary officials will hope that annual price growth will slow in October, after accelerating for two consecutive months to 26.4% in September. That likely delayed the start of an easing cycle.
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Norway could see a notable slowdown in inflation to 2.4% on Monday. But as officials worried about the krone’s weakness, the central bank kept borrowing costs unchanged on Thursday, signaling no plans for any cuts.
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With Russia’s October release due Wednesday, policymakers will wait to see whether a 200 basis point rate hike last month will help slow price growth toward the 4% target. In September this was 8.6%.
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Nigeria’s inflation figures are expected to rise from 32.7% to 33.4% on Friday, according to Bloomberg Economics, after petrol costs rose due to subsidy cuts.
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On the same day, data in Israel is likely to reveal that price growth remained above 3%, the top end of the official target. It has been above target for three months in a row as conflicts in Gaza and Lebanon send government spending on defense soaring and supply-side constraints worsen.
Zambia’s central banks are expected to keep interest rates unchanged at 13.5% to support the drought-stricken economy. The ordeal has prompted the International Monetary Fund to nearly halve its growth expectations for 2024 to 1.2%.
Latin America
Argentine President Javier Milei will likely get some welcome news with October’s consumer prices report. Monthly inflation may have slowed to a three-year low of just under 3%, while annual inflation is running below 200%, down from April’s peak of 289.4%.
Analysts expect an aggressive tone in the minutes of the Brazilian central bank’s November 6 decision to raise interest rates to 11.25%. At the same time, there may be a shortage of forward-looking guidance, as the Brazilian government has not yet committed to austerity and all the wildcards inherent in the US election.
Economists expect a rate hike of at least the same magnitude at the December BCB meeting, and many have revised their final interest rate projections upward to 13% or more.
Uruguay’s central bank has maintained its key interest rate at 8.5% since April and is likely to maintain it at that level for the fifth time in a row.
In Peru, labor market figures in Lima and September GDP data are available, both of which underline the economy’s recovery from last year’s recession.
The Banco de Mexico’s plea for a third straight rate cut on November 14 seemed fairly simple a month ago, but a new bout of faster inflation makes this a slightly more difficult decision.
Still, the combination of slower growth and 21 consecutive months of declining core inflation will likely see Governor Victoria Rodriguez and his colleagues continue with the cut to 10.25%.
–With help from Brian Fowler, Laura Dhillon Kane, Monique Vanek, Robert Jameson, Paul Wallace and Piotr Skolimowski.
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