Inflation (yes inflation. Not deflation)
- The US consumer is on display today with the release of US retail sales data. This is nominal data, so the lower gasoline prices will impact the headline. Strip away autos and gasoline and sales should be up a robust 0.6%. Not really an economy crying out for 0% interest rates.
- US import prices are also due for release. Normally this is not a major focus for investors, but with the strength of the dollar the supposed collapse of import prices has been a cause of concern. Excluding oil products, US import prices are rising.
- Prices are also rising in the Euro area, with German, French and Portuguese consumer price data due today. Of course the dollar impact on commodity prices means that there is less of a deflation impulse from commodities in the Euro.
- Bank of England hawk McCafferty was sounding hawkish in comments overnight, suggesting (logically enough) that policy makers should look through the current low inflation episode. Carney was sounding less hawkish, talking of gentle rate increases.
Listen to the audio version of this briefing.