To The Moon

With the confusing U.S. unemployment report for February in the rearview mirror, economists will be looking at the consumer inflation data this week to get a better sense of what actions the Federal Reserve might soon take with
interest-rate policy.

The February jobs report had a so many moving parts and revisions that it will put more weight that usual on the inflation data, said Drew Matus, chief market strategist for MetLife Investment Management.

But the data could lead to more "handwringing" on Wall Street over fears that inflation is reaccelerating, said the team at Oxford Economics, in a note to clients, as a rebound in gasoline prices likely helped drive the overall
inflation rate higher last month.

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Here's a peek at what's expected this week in key economic data:

1. February CPI: Tuesday, 8:30am

Economists surveyed by the Wall Street Journal expect a fairly strong reading of the consumer-price index.

The headline CPI is expected to tick up a bit, to an 0.4% gain from an 0.3% gain in January. That would be the biggest gain since September.

On a year-over-year basis, consumer inflation is expected to remain at a 3.1% rate for the second straight month.

The core measure, which excludes food and energy, is seen rising 0.3%, a tick lower than the prior month. Year- over-year core inflation might dip to 3.7% from 3.9% in January. And that would be the lowest reading since April 2021.

2. February PPI: Thursday, 8:30am

Producer prices are forecast to have risen 0.3% in February for the second straight month. That would be the first two-month increase since September.

All eyes will be on the services components, which feed into the Fed's favorite inflation measure, the personal consumption expenditure, or PCE, index.

3. February retail sales: Thursday, 8:30am

Retail sales are expected to rebound, rising 0.7%, almost completely reversing the 0.8% drop in the prior month, January. That would be the biggest gain since September.

The gain will be led by higher gas prices and stronger car sales, said Scott Anderson, chief U.S. economist at BMO Capital Markets.

Excluding automobile sales, retail sales are expected to rise 0.4% after a 0.8% drop in January.

4. March consumer sentiment: Friday, 10am

Consumer sentiment is expected to rebound to 77.5 in March from 76.9 at the end of February. That's still below the 79 reading in January.

The uptick in the unemployment rate and retail gasoline prices kept the lid on sentiment, Oxford said.

Economic news this week

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