Inflation details matter

Daily update

Japan’s January consumer price inflation data slowed, but the slowdown was less marked in services. This was because of foreign holiday prices—Japanese consumers are following the developed economy trend of prioritizing fun. The drivers of inflation numbers are relatively few, making a sudden rate increase by the Bank of Japan unlikely, but the modest nature of the inflation slowdown keeps alive prospects for a later rate increase.
The UK British Retail Consortium shop price index slowed. Consumers’ resentment at profit-led inflation helps slow food price increases (non-food price increases remain subdued). Supermarkets’ two-tier pricing structure does not translate into the consumer price measure, but it does mean consumers have more spending fire power in reality.
German and French consumer confidence are due. European consumers will play a role in supporting the economy (if not on the scale of their hedonistic US counterparts), but sentiment data is still subject to distortions. Political noise may be a particular issue.
The US Dallas Fed survey comments included the remark “I have no idea what is going to happen”— just the sort of person you want filling in a survey about the future. Today’s durable goods orders data will gather some mild interest, and house prices figures will be watched too.