ZCZC
BCN-02
US-ECONOMY
US inflation modest in 2017, despite rising retail sales
WASHINGTON, Jan 13, 2018 (BSS/AFP) – Healthy retail sales in 2017 are
another sign of the growing strength of the US economy, but inflation was
slower than expected, according to the latest government data released
Friday.
This combination of solid economic growth and consumer spending, that has
come with falling unemployment but only tepid signs of wage and price
increases, has baffled central bankers at the Federal Reserve.
But economists say details of the data from December show some hints that
inflation may finally be on the rise.
The Consumer Price Index, which measures the cost of goods and services to
individuals, rose just 0.1 percent in December, held down by falling energy
prices, the Commerce Department said in its monthly report.
That was half the increase expected by analysts.
However, excluding volatile food and fuel components, “core” CPI rose 0.3
percent last month, the biggest jump since January 2017, on rising costs for
shelter and medical care.
For the full year, CPI rose 2.1 percent, the same as 2016, while core CPI
slowed, posting a 1.8 percent increase after the 2.2 gain in the previous
year.
– Signs inflation rising –
But analysts drilling into details of the data note that inflation was
accelerating in the final quarter of the year, which means the Fed may be
right that the lack of price pressures earlier in 2017 was due to one-off
factors.
“The three-month annualized change in the core CPI increased to 2.5 percent
in December and is up markedly from the low of this year, zero percent, in
May, providing further evidence that the earlier soft patch was only
transitory,” Mickey Levy of Berenberg Capital Markets said in a research
note.
In addition, low energy prices seen in the final month of the year are
unlikely to be sustained, economists say.
MORE/MR/ 1010 hrs.
ZCZC
BCN-03
US-ECONOMY-TWO-LAST
The energy index last month fell 1.2 percent compared to November. Gasoline
prices declined after a big jump in the prior month, outweighing the rise in
winter fuel oil prices as a cold snap hit the Northeastern United States, the
report said.
Energy prices were up sharply in 2017 compared to 2016, with gasoline
rising nearly 11 percent and fuel oil up more than 15 percent.
Shelter costs rose 0.4 percent in the month, faster than usual, while
medical care increased 0.3 percent and food was up 0.2 percent.
In addition, used car and truck prices jumped 1.4 percent in the month,
while new car prices gained 0.6 percent.
But apparel prices fell for the fourth consecutive month, and airline fares
fell 0.5 percent after a 2.4 percent drop in November.
– Online shopping jumps –
In a separate report Friday, the Commerce Department said a holiday season
jump in online shopping sent US retail sales higher in December.
Total retail sales rose to $495.4 billion in the final month of the year, a
0.4 percent increase compared to November.
Sales for all of last year rose 4.2 percent, the biggest increase since
2014, outpacing the 3.2 percent rise in 2016, according to the report.
The biggest gains came in the category known as “nonstore retailers” which
rose 1.2 percent in the month and were up nearly 13 percent compared to the
same month of last year.
Meanwhile, despite reports of healthy sales from some stores during the
holiday shopping season, department store sales declined 1.1 percent from the
prior month, while sporting goods stores fell 1.6 percent.
A closely-watched measure known as “core” sales — which excludes autos —
increased 0.4 percent in the month, and posted a gain of 4.3 for the full
year, which was the biggest increase since 2011.
Analysts note the upward revisions to November and October core sales make
the report stronger than it initially appears, boosting economic growth
estimates. Analysts have forecast US fourth quarter growth at between 2.7 and
3.2 percent.
BSS/AFP/MR/1010 hrs