1. US Inflation Stays Elevated, Adding Pressure for More Fed Hikes — US consumer prices rose briskly at the start of the year, a sign of persistent inflationary pressures that could push the Federal Reserve to raise interest rates even higher than previously expected.
The overall consumer price index climbed 0.5% in January, the most in three months and bolstered by energy and shelter costs, according to data out Tuesday from the Bureau of Labor Statistics. The measure was up 6.4% from a year earlier. Excluding food and energy, the so-called core CPI advanced 0.4% last month and was up 5.6% from a year earlier. Economists see the gauge as a better indicator of underlying inflation than the headline measure.
2. U.S. Retail Sales Rebounded Sharply in January — U.S. retail sales jumped 3% in January as consumers broadly boosted spending on vehicles, furniture, clothing and dining out, adding to signs that economic growth picked up at the start of the year. The unexpectedly strong January employment report and still solid wage gains bode well for consumer spending, and some economists think economic growth could be picking up. The Federal Reserve has raised interest rates aggressively since last March in an attempt to slow the economy and bring down inflation. The consumer-price index climbed 6.4% in January from a year earlier, down slightly from 6.5% in December but still well above the Federal Reserve’s 2% inflation target. Retail sales grew broadly across the economy in January, including at restaurants, car dealerships, department stores and furniture and appliance sellers.
3. January PPI Report Shows Producer Prices Rose — U.S. supplier prices rose 6% in January from a year earlier, a sign of still stubborn inflation pressures in the economy.
That increase in the producer-price index, which generally reflects supply conditions in the economy, was slower than December’s 6.5% gain, the Labor Department said Thursday. And it was down markedly from the 11.7% rise in March 2022, the recent peak. The PPI increased 0.7% in January from the prior month, compared with a revised 0.2% drop in December, and significantly faster than the 0.2% average monthly rise in the year before the pandemic. Fed officials in recent public appearances have steeled themselves for a long inflation fight. Earlier this month policy makers raised their benchmark federal-funds rate by 0.25 percentage point, bringing it to a range between 4.5% and 4.75%, the highest level since 2007. Officials are on track to raise interest rates at their meeting in March and to signal further increases will be likely.
4. Two Fed Officials Would Have Supported Larger Rate Increase This Month — two Federal Reserve officials said they would have supported raising interest rates by a half percentage point at the central bank’s meeting earlier this month given the strength of economic demand and inflation. Ms. Mester said it was too early to specify the size of the rate increase that would be appropriate at the Fed’s next meeting, on March 21-22. But she said that the central bank wasn’t locked in to raising rates by a quarter point at coming policy meetings. “It’s not always going to be, you know, 25 [basis points],” she said during a question-and-answer session at a conference in Sarasota, Fla. “As we showed, when the economy calls for it, we can move faster. And we can do bigger [increases] at any particular meeting. St. Louis Fed President James Bullard also said Thursday he would have favored a half-point rate increase at the last meeting and that he would support moving as quickly as possible to raise rates to just below 5.5%.

The week ahead — Economic data from Econoday.com:

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