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Consumer Prices in U.S. Likely Rose in January on Fuel

The cost of living in the U.S. probably rose in January by the most in four months, boosted by higher prices for food and energy, economists said before a report today.

The consumer-price index climbed 0.3 percent after no change the prior month, according to the median forecast of 82 economists surveyed by Bloomberg News. The so-called core measure, which excludes more volatile food and fuel expenses, may have increased 0.2 percent.

Retailers from Limited Brands Inc. (LTD) and Target Corp. (TGT) discounted merchandise after the holidays as 12.8 million Americans remain unemployed, showing companies have little pricing power. A lack of inflation is one reason Federal Reserve policy makers have said they intend to keep interest rates low through at least 2014.

“We are seeing upward momentum in prices of food and other commodities that producers can’t pass along to consumers because consumers are still very fragile,” Lindsey Piegza, an economist at FTN Financial in New York, said before the report.

The Labor Department’s price data are due at 8:30 a.m. in Washington. Economists’ estimates ranged from increases of 0.1 percent to 0.4 percent.

Prices over the past 12 months may have climbed 2.8 percent, the smallest year-to-year gain since March, according to economists’ forecasts.

Outlook Brightening

Another report may show the economy will continue to expand into the second half of the year. The Conference Board’s index of leading economic indicators, which signals the outlook for three to six months, rose 0.5 percent in January after a 0.4 percent gain in December, according to the median of economists’ forecasts before the 10 a.m. report.

The price report may underscore Fed ChairmanBen S. Bernanke’s comments on Feb. 7 that central bank officials expected inflation to “remain subdued” due to the “well- anchored inflation expectations, more-stable commodity prices, and substantial slack in labor and product markets.”

Household purchases climbed 2.2 percent in 2011 after increasing 2 percent in 2010, the weakest two-year performance of any post-World War II expansion.

Unemployment has held above 8 percent since February 2009, the longest such run since the monthly record-keeping began in 1948. Nonetheless, the rate is starting to drop, reaching a three-year low of 8.3 percent in January.

Early Markups

Companies often try to raise prices at the beginning of the year to test consumers’ willingness to pay more. Those increases are sometimes rolled back in the course of the year, particularly during times when consumers are strapped, according to Mark Vitner, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina.

The price of oil and some other commodities have risen in the last two months amid signs that Europe may resolve its debt crisis and that the U.S. economy was gaining ground.

The cost of a gallon of regular gasoline at the pump averaged $3.38 in January, compared with $3.26 the prior month, according to data from AAA, the nation’s largest auto group.

Nonetheless, Fed policy makers see inflation decelerating in 2012 to below their 2 percent goal, with most expecting prices to rise 1.4 percent to 1.8 percent this year, according to forecasts released Jan. 25.

“Inflation has been subdued in recent months, and longer- term inflation expectations have remained stable,” central bankers said Jan. 25. The monetary policy-making committee “also anticipates that over coming quarters, inflation will run at levels at or below those consistent with the committee’s dual mandate” of fostering price stability and maximum employment.

Post-Holiday Discounts

Retailers, including Limited Brands and Target, posted same-store sales last month that were stronger than forecast as shoppers took advantage of post-holiday discounts. More shoppers cashed out their holiday gift cards and sought out clearances on winter apparel, according to a Bloomberg Industries report.

Retail stocks have accompanied gains in the broader market so far this year. The Standard & Poor’s Supercomposite Retail Index has gained 8.5 percent, compared with an 8 percent increase for the S&P 500 Index.

The CPI is the broadest of three price gauges from the Labor Department because it includes goods and services. Almost 60 percent of the index covers prices consumers pay for services ranging from medical visits to airline fares, movie tickets and rents.

A report yesterday showed producer prices rose 0.1 percent in January, less than forecast, as food and energy prices dropped. The import-price index, released Feb. 14, rose for the second time in six months.

                    Bloomberg Survey
=====================================================
                               CPI     Core      LEI
                                        CPI
                              MOM%     MOM%     MOM%
=====================================================
Date of Release              02/17    02/17    02/17
Observation Period            Jan.     Jan.     Jan.
-----------------------------------------------------
Median                        0.3%     0.2%     0.5%
Average                       0.3%     0.2%     0.6%
High Forecast                 0.4%     0.3%     1.4%
Low Forecast                  0.1%     0.1%     0.4%
Number of Participants          82       80       48
Previous                      0.0%     0.2%     0.4%
-----------------------------------------------------
4CAST                         0.2%     0.2%     ---
ABN Amro                      0.2%     0.2%     ---
Action Economics              0.2%     0.1%     0.6%
Aletti Gestielle              0.3%     0.2%     ---
Ameriprise Financial          0.2%     0.1%     0.5%
Banca Aletti                  0.3%     0.1%     ---
Banesto                       ---      ---      0.4%
Bank of Tokyo- Mitsubishi     0.3%     0.2%     ---
Bantleon Bank AG              0.3%     0.2%     ---
Barclays Capital              0.2%     0.2%     0.6%
Bayerische Landesbank         0.3%     0.2%     0.5%
BBVA                          0.3%     0.1%     0.5%
BMO Capital Markets           0.3%     0.2%     0.5%
BNP Paribas                   0.1%     0.2%     ---
BofA Merrill Lynch            0.3%     0.2%     ---
Briefing.com                  0.3%     0.1%     0.4%
Capital Economics             0.3%     0.2%     ---
CIBC World Markets            0.3%     0.2%     ---
Citi                          0.3%     0.2%     0.4%
Clariden Leu                  0.3%     ---      ---
ClearView Economics           0.2%     0.1%     ---
Comerica                      0.2%     0.2%     0.5%
Commerzbank AG                0.3%     0.2%     0.4%
Credit Suisse                 0.3%     0.2%     1.0%
Daiwa Securities America      0.2%     0.1%     ---
Danske Bank                   0.2%     0.2%     ---
DekaBank                      0.3%     0.2%     ---
Desjardins Group              0.4%     0.2%     0.6%
Deutsche Bank Securities      0.2%     0.2%     ---
Deutsche Postbank AG          0.3%     0.2%     0.5%
DZ Bank                       0.3%     0.2%     0.4%
Exane                         0.2%     0.1%     ---
Fact & Opinion Economics      0.3%     0.2%     0.9%
First Trust Advisors          0.2%     0.2%     0.4%
FTN Financial                 0.1%     0.2%     ---
Goldman, Sachs & Co.          0.3%     0.2%     ---
Helaba                        0.2%     0.2%     0.5%
Herrmann Forecasting          0.3%     0.2%     0.5%
High Frequency Economics      0.3%     0.1%     0.7%
HSBC Markets                  0.2%     0.2%     0.5%
Hugh Johnson Advisors         0.4%     0.2%     0.6%
IDEAglobal                    0.2%     0.1%     0.5%
IHS Global Insight            0.3%     0.2%     ---
Informa Global Markets        0.3%     0.2%     ---
ING Financial Markets         0.4%     0.3%     0.5%
Intesa Sanpaulo               0.3%     0.2%     ---
J.P. Morgan Chase             0.3%     0.2%     ---
Janney Montgomery Scott       0.2%     0.1%     0.8%
Jefferies & Co.               0.3%     0.2%     0.4%
Landesbank Berlin             0.1%     0.1%     0.5%
Landesbank BW                 0.3%     0.2%     ---
Maria Fiorini Ramirez         0.3%     0.2%     0.5%
Market Securities             0.4%     0.2%     0.8%
MET Capital Advisors          0.3%     ---      ---
Mizuho Securities             0.2%     0.1%     0.4%
Moody’s Analytics             0.3%     0.2%     0.7%
Morgan Keegan & Co.           0.3%     0.2%     0.4%
National Bank Financial       0.3%     0.2%     ---
Natixis                       0.2%     0.1%     ---
Nomura Securities             0.3%     0.3%     0.6%
Nord/LB                       0.2%     0.2%     0.5%
OSK Group/DMG                 0.3%     0.2%     ---
O’Sullivan                    0.3%     0.2%     0.5%
Parthenon Group               0.3%     0.2%     1.4%
Pierpont Securities           0.2%     0.2%     ---
PineBridge Investments        0.3%     0.2%     0.4%
PNC Bank                      0.3%     0.2%     0.6%
Raiffeisenbank International  0.4%     0.1%     ---
Raymond James                 0.3%     0.1%     0.5%
RBC Capital Markets           0.3%     0.2%     ---
RBS Securities                0.2%     0.2%     ---
Scotia Capital                0.3%     0.2%     0.4%
Societe Generale              0.3%     0.2%     ---
Standard Chartered            0.3%     0.2%     ---
Stone & McCarthy Research     0.3%     0.2%     0.4%
TD Securities                 0.3%     0.2%     0.6%
UBS                           0.2%     0.2%     0.5%
Union Investment              0.3%     0.2%     ---
University of Maryland        0.3%     0.1%     0.5%
Wells Fargo & Co.             0.3%     0.2%     0.5%
WestLB AG                     0.3%     0.2%     0.6%
Westpac Banking Co.           0.2%     0.1%     0.4%
Wrightson ICAP                0.2%     0.2%     0.6%
=====================================================

To contact the reporters on this story: Robert Willis in Washington at bwillis@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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