China and U.S. inflation numbers arrive this week
02/14/2011 6:00 pm EST
China is scheduled to release inflation numbers for January on Tuesday, February 15. After running at a 5.2% annual rate in November, inflation fell to a 4.6% rate in December. The consensus is that inflation will rebound after that December decline but there’s disagreement on the size of the pickup. The consensus among economists points to a 5.3% inflation rate but a significant majority of traders thinks there’s a good chance that the rate will come at 4.9%. The National Bureau of Statistics is expected to reduce the weighting for food in China’s inflation numbers in January as part of its regular five-year adjustment to the way it calculates inflation. With food prices racing ahead of inflation in other sectors in China, a reduction in the weighting of food prices in the index would lower the overall inflation rate. The chance that this kind of technicality would convince anyone of a change in inflation would seem low except that traders were pointing to this thinking as a reason that stocks rallied in China on February 14. Stocks were up 0.8% in Hong Kong and 1.75% in Shanghai.
U.S. inflation figures are scheduled for release on Thursday, February 17. In December the Consumer Price Index moved up 0.5%, the biggest monthly gain since July 2009. But the move was driven almost entirely by a 4.6% gain in energy prices. Energy prices accounted for 0.4 percentage points of the 0.5% gain in the CPI. Stripping out energy and food prices, the core inflation rate hardly budged, rising just 0.1%.
The consensus among economists is calling for more of the same in the January numbers with the headline CPI projected to climb 0.3% and core inflation to show a 0.1% increase. Nothing there to change Federal Reserve policy or to roil the U.S. stock market.