US: Mixed data, but inflation fears are overdone

5 min

January retail sales fell -0.3% m/m to +3.6% y/y, driven by falling auto sales which had been pulled forward by hurricane-induced replacements. Core sales were flat, pushing the y/y rate down to a still respectable +3.9%. Recent inflation concerns seem overdone. Consumer prices rose +0.5% m/m, but the y/y rate was unchanged at +2.1%, and a year ago it was +2.5%. The core rate was +1.8% y/y, a rate which has ranged between +1.7% and +1.8% for 9 months. Similarly producer prices rose to +2.7% y/y, but two months ago it was +3.1%, while core prices have been in a range of +2.2% and +2.4% for 6 months. Regional Fed reports continue to show manufacturing strength, but manufacturing industrial production was flat m/m and at +1.8% y/y. Volatile housing starts rose to the second highest level of the recovery, and the Housing Market Index continued to show strong optimism among home builders, but existing home sales fell -3.2% m/m to -4.8% y/y.