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Consumer Prices in U.S. Probably Rose for First Time Since March

Photographer: George Frey/Bloomberg

A visitor to the Outdoor Retailer Summer Market show looks at Salomon shoes in Salt Lake City, on Aug. 2, 2012. Close

A visitor to the Outdoor Retailer Summer Market show looks at Salomon shoes in Salt... Read More

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Photographer: George Frey/Bloomberg

A visitor to the Outdoor Retailer Summer Market show looks at Salomon shoes in Salt Lake City, on Aug. 2, 2012.

The cost of living in the U.S. probably rose in July for the first time in four months, showing inflation is in check, economists said before a report today.

The projected 0.2 percent gain in the consumer-price index follows no change in June, according to the median estimate of 84 economists surveyed by Bloomberg. Other data may show industrial production rose and homebuilder confidence stabilized.

The increase last month probably capped the smallest year- to-year gain in consumer prices since January 2011, indicating companies are finding it difficult to charge more with joblessness hovering above 8 percent. A lack of inflation will make it possible for Federal Reserve policy makers to take additional steps if needed to revive the economic expansion.

“It’s not a picture that says we have a broad-based inflation problem,” said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts.

The Labor Department will issue the consumer-price index at 8:30 a.m. in Washington. Economists’ estimates ranged from unchanged to a 0.4 percent gain.

At 9:15 a.m. in Washington, a Federal Reserve report is projected to show output at factories, mines and utilities increased 0.5 percent in July after increasing 0.4 percent a month earlier, according to the median forecast in a Bloomberg survey.

A report from the Federal Reserve Bank of New York at 8:30 a.m. may show factories in its region expanded in August at about the same pace as in the prior month.

Year Ago

Today’s Labor Department price report is projected to show the cost-of-living index climbed 1.6 percent from July 2011 after a 1.7 percent year-over-year gain in June, the survey median showed.

Core prices, which exclude volatile food and energy costs, rose 0.2 percent for a fifth month, according to the survey median. From a year earlier, the gauge probably climbed 2.2 percent, the same as in June.

Dick’s Sporting Goods Inc. (DKS) is among companies having mixed success in boosting prices, getting customers to pay more for some items and having to pull back on others.

“Some of them worked out fine and the customer accepted them and some other ones didn’t,” Edward Stack, chairman and chief executive officer of the Coraopolis, Pennsylvania-based retailer, said on an Aug. 14 earnings call.

Retail Sales

Sustained gains in demand are needed to give merchants more pricing power. Retail sales rose in July for the first time in four months, the Commerce Department reported yesterday.

Merchants including Gap Inc. (GPS), Home Depot Inc. and TJX Cos. are reporting improved sales as households strengthen their balance sheets and look beyond the global economic slowdown.

The consumer price index includes goods and services, making it the broadest of three inflation gauges from the Labor Department. About 60 percent of the index measures prices paid for services, including doctor visits, airfares, movie tickets and rent.

Prices paid by producers rose 0.3 percent in July, the Labor Department reported yesterday. Wholesale costs increased 0.5 percent over the prior year, the smallest gain since October 2009.

Federal Reserve

The Fed remains cautious about the recovery’s resilience. Central bankers have said they’re prepared to stimulate the economy if necessary to boost growth and reduce a jobless rate that’s exceeded 8 percent for more than three years. Subdued inflation gives Fed policy makers more leeway to take action.

Investors agree a flare-up in prices is of little concern. The difference in yields between 5-year notes and Treasury Inflation Protected Securities, or TIPS, which represents traders’ expectations for the rate of inflation over the life of the securities, was 1.91 percentage point as of at 4 p.m. in New York yesterday. The Fed’s goal is to keep inflation at around 2 percent.

Also today, the National Association of Home Builders/Wells Fargo confidence index, due at 10 a.m., probably held at 35 in August, matching the prior month’s figure that was the highest in five years, according to the median in a Bloomberg survey of economists.

                   Bloomberg Survey

====================================================
                               CPI     Core     Ind.
                                        CPI    Prod.
                              MOM%     MOM%     MOM%
====================================================
Date of Release              08/15    08/15    08/15
Observation Period            July     July     July
----------------------------------------------------
Median                        0.2%     0.2%     0.5%
Average                       0.2%     0.2%     0.5%
High Forecast                 0.4%     0.2%     1.1%
Low Forecast                  0.0%     0.0%    -0.2%
Number of Participants          84       83       84
Previous                      0.0%     0.2%     0.4%
----------------------------------------------------
4CAST                         0.2%     0.2%     0.4%
ABN Amro                      0.2%     0.2%     0.6%
Action Economics              0.3%     0.2%     0.5%
Aletti Gestielle              0.2%     0.2%     0.4%
Ameriprise Financial          0.2%     0.2%     0.5%
Banorte-IXE                   0.2%     0.2%     0.4%
Bantleon Bank AG              0.1%     0.2%     0.6%
Barclays                      0.2%     0.2%     0.4%
Bayerische Landesbank         0.4%     0.2%     0.6%
BBVA                          0.2%     0.2%     0.4%
BMO Capital Markets           0.2%     0.1%     0.6%
BNP Paribas                   0.2%     0.2%     0.5%
BofA Merrill Lynch            0.2%     0.2%     0.5%
Briefing.com                  0.2%     0.2%     1.0%
Capital Economics             0.1%     0.1%     0.3%
CIBC World Markets            0.1%     0.2%     0.7%
Citi                          0.3%     0.2%     0.8%
ClearView Economics           0.2%     0.2%     0.3%
Comerica                      0.2%     0.2%     0.4%
Commerzbank AG                0.2%     0.2%     0.4%
Credit Agricole CIB           0.0%     0.2%     0.6%
Credit Suisse                 0.2%     0.2%     0.5%
Daiwa Securities America      0.1%     0.1%     0.5%
Danske Bank                   0.2%     0.2%     0.3%
DekaBank                      0.1%     0.2%     0.5%
Desjardins Group              0.3%     0.2%     0.4%
Deutsche Bank Securities      0.2%     0.2%     0.6%
Deutsche Postbank AG          0.1%     0.2%     0.3%
DZ Bank                       0.4%     0.2%     0.3%
Exane                         0.2%     0.2%     0.4%
First Trust Advisors          0.1%     0.2%     0.5%
FTN Financial                 0.2%     0.2%     0.4%
Goldman, Sachs & Co.          0.1%     0.1%     0.4%
Helaba                        0.1%     0.2%     0.4%
High Frequency Economics      0.3%     0.2%     0.6%
Horizon Investments           0.2%     0.2%     0.7%
HSBC Markets                  0.2%     0.2%     0.6%
Hugh Johnson Advisors         0.3%     0.1%     0.4%
IDEAglobal                    0.2%     0.2%     0.3%
IHS Global Insight            0.2%     0.2%     0.7%
Informa Global Markets        0.2%     0.2%     0.4%
ING Financial Markets         0.2%     0.2%     0.4%
Insight Economics             0.2%     0.1%     0.8%
Intesa Sanpaulo               0.3%     0.2%     0.3%
J.P. Morgan Chase             0.1%     0.2%     0.6%
Janney Montgomery Scott       0.1%     0.1%     0.8%
Jefferies & Co.               0.2%     0.2%     0.6%
John Hancock Financial        0.2%     0.2%     0.2%
Landesbank Berlin             0.0%     0.0%    -0.2%
Landesbank BW                 0.2%     0.2%     0.4%
Lloyds Bank                   0.3%     0.2%     0.4%
Maria Fiorini Ramirez         0.2%     0.2%     0.5%
Market Securities             0.2%     0.2%     0.7%
MET Capital Advisors          0.1%     ---      0.5%
Mizuho Securities             0.1%     0.1%     0.2%
Moody’s Analytics             0.2%     0.2%     0.8%
Morgan Stanley & Co.          0.3%     0.2%     0.6%
National Bank Financial       0.1%     0.1%     0.5%
Natixis                       0.2%     0.2%     0.6%
Newedge                       0.2%     0.1%     0.7%
Nomura Securities             0.1%     0.2%     0.6%
OSK Group/DMG                 0.2%     0.2%     0.6%
Pierpont Securities           0.2%     0.2%     0.4%
PineBridge Investments        0.2%     0.1%     0.4%
PNC Bank                      0.1%     0.2%     0.4%
Raiffeisenbank International  0.1%     0.1%     0.0%
Raymond James                 0.3%     0.2%     0.7%
RBC Capital Markets           0.2%     0.2%     0.6%
RBS Securities                0.2%     0.1%     0.5%
Regions Financial             0.1%     0.2%     0.6%
Renaissance Macro             0.1%     0.2%     0.5%
Scotiabank                    0.2%     0.2%     0.6%
SMBC Nikko Securities         0.2%     0.2%     0.3%
Societe Generale              0.2%     0.2%     0.6%
Standard Chartered            0.2%     0.2%     0.3%
Stone & McCarthy              0.2%     0.2%     0.6%
TD Securities                 0.1%     0.2%     0.7%
UBS                           0.3%     0.2%     0.7%
UniCredit Research            0.2%     0.2%     0.5%
Union Investment              0.3%     0.2%     0.6%
University of Maryland        0.3%     0.2%     0.4%
Wells Fargo & Co.             0.2%     0.2%     0.4%
Westpac Banking Co.           0.4%     0.2%     0.6%
Wrightson ICAP                0.2%     0.2%     1.1%
====================================================

To contact the reporter on this story: Lorraine Woellert in Washington at lwoellert@bloomberg.net

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

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