A measure of US core consumer inflation likely eased to 2.1% on an annual basis.
The world economy is set to get fresh insight into whether inflation is turning sluggish again as the US and China publish price data that's set to endorse the decision of central banks to steer away from tighter monetary policy.
A measure of US core consumer inflation likely eased to 2.1% on an annual basis, helping to justify the Federal Reserve's pause in its interest-rate hike cycle, according to economists surveyed ahead of a report due Wednesday. While China's factory inflation reading on Friday will probably show a mere 0.3% increase from a year earlier, economists at Goldman Sachs Group expect a fall back into negative territory for the first time since 2016.
Having already turned dovish in recent weeks, central banks will likely view the data as reason to keep monetary policy looser than perhaps they envisaged at the end of last year. JPMorgan Chase & Co. economists predict average worldwide inflation will slow to less than 2% this quarter from 2.8% in October.
US inflation will be pored over for signals on what it means for the Fed. While cheaper fuel will weigh on the Labor Department's consumer price index, ongoing wage and retail sales growth will offer support.
Analysts project the core index, which excludes food and energy, rose 0.2% from the prior month for the fifth straight time, indicating inflation is steady without flaring up. The expected 2.1% annual gain, following 2.2% in December, suggests that the Fed's preferred core index — a separate measure from the Commerce Department based on consumption — remains below the central bank's 2% inflation goal.
The inflation slowdown is more dramatic when looking at the headline gauge, which probably cooled to a 1.5% annual gain — a two-year low — from 1.9%.
In addition, a change in the Labour Department's methodology for calculating prices of residential telecommunications, which starts with this week's January report, "could put downward pressure on the CPI," according to a JPMorgan research note.