Investors on the edge of their seats about inflation’s next move don’t have to wait until mid-March to find out how prices changed this month.
PriceStats, a Cambridge, Mass., firm that tracks prices of millions of items sold online, produces a measure of U.S. consumer prices daily. And its latest figures show prices have crept higher so far in February, underscoring that inflation pressures are building.
PriceStats was born out of the Massachusetts Institute of Technology’s Billions Prices Project, one of the most widely cited measures high-frequency inflation data. PriceStats data is distributed to through a partnership with financial services firm State Street Corp.
By producing a daily index of prices–PriceStats tracks inflation in 22 countries–it has a considerable jump on figures that government entities calculate monthly, such as the Labor Department’s consumer-price index. February’s CPI reading is scheduled for release March 13. The Commerce Department won’t release its January reading of the price index for personal-consumption expenditures until March 1. The February reading of that gauge, the Federal Reserve’s preferred inflation measure, won’t come out until March 29.
That’s a week after central bankers meet to determine their next interest-rate move.
PriceStats data does not exactly track government measures of inflation, but the firm’s U.S. index trends in the same direction as CPI, meaning the gauge could serve as an early clue to the direction of prices.
It’s weighted the same way as the CPI, meaning it assumes Americans’ budgets reflect the same share of clothing, food, medical care and other goods and services as the Labor Department does. PriceStats includes gasoline prices posted on the internet and uses proxies to estimate rent, tuition and other prices not found easily online.
PriceStats data shows U.S. consumer prices were up 2.6% from a year earlier on Saturday. Prices rose about 0.2% in mid-February from mid-January, on a nonseasonally adjusted basis. That extends a streak of fairly steady increases since late December, though gains eased in the second part of last week.
“So far February looks like another solid month for inflation,” said Michael Metcalfe, head of global macro strategy for State Street. “We’re not hitting the panic button just yet, but the trend in inflation is still strong, and the question is, ‘How much stronger will it get?’”
Mr. Metcalfe anticipates year-over-year inflation to accelerate in March, given that price increases were soft during the month last year. If prices build in February, that would send a clear signal that inflation is taking off in 2018.
It could be a concern for Fed policy makers who penciled in three quarter-point rate increases to their benchmark interest rate this year.
“If the inflation trend continues, you’re probably looking for at least four hikes this year,” Mr. Metcalfe said.
The CPI showed Americans paid a seasonally adjusted 0.5% more for goods and services in January from the previous month, the Labor Department said last week. When excluding energy and food, prices rose a seasonally adjusted 0.349% in January—the strongest one-month increase since March 2005.
Recent readings showing consumer prices and wages are rising at a faster rate after years of very modest increases is causing some unease among investors. They’re concerned the data could cause the Fed to be more aggressive in raising interest rates to keep inflation in check, which could have a depressing effect on stock prices.
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from Real Time Economics http://ift.tt/2EHg0UJ
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