What can consumers afford?

Daily update

US January consumer price data is due. The focus should be on the details more than the headline. The largest part of the consumer price calculation is a fictitious housing price that people don’t pay. Such prices have no influence over perceptions of the affordability crisis.
The affordability crisis is influenced by high frequency purchases. Food, gasoline, and perhaps electricity prices matter. It is hard to convince consumers that prices are falling when each weekly trip to WalMart reminds them that steak prices rose almost 18% in the past year. There is political concern over affordability. Tariffs on some imported food have been rolled back, and the Financial Times reports the US administration is contemplating cutting tariffs paid by US buyers of imported metal products. However, while tariff increases have increased consumer prices tariff reductions do not necessarily reduce consumer prices.
Europe has an unexciting calendar. Final January Spanish consumer prices almost certainly will not change from the initial number. Eurozone fourth quarter GDP is overlooked, in favor of the national numbers.
Bank of England Chief Economist Pill is to speak. Any chief economist should be heard in reverential silence, but Pill’s opinion carries extra weight as markets anticipate rate cuts.