Will CPI Spark a Shift? All Eyes on US Inflation Next Week!

Tuesday, 14 January 2025, 15:30 – US PPI (MoM) (Dec)

The U.S. Producer Price Index (PPI) for November 2024, published on December 12, 2024, showed a 0.4% increase from the previous month, exceeding economists’ expectations of 0.2% and surpassing the 0.3% rise seen in October. While service prices saw a modest 0.2% increase, the sharp 54.6% jump in wholesale egg prices, driven by the avian flu outbreak, was a significant factor in the overall rise in producer prices. The upcoming PPI release may reflect ongoing inflationary pressures, particularly if food prices remain high. However, the Federal Reserve’s recent interest rate cuts could have an impact on producer prices in the coming months.

Wednesday, 15 January 2025, 15:30 – US CPI (YoY) (Dec)

On December, the U.S. Bureau of Labor Statistics released the Consumer Price Index (CPI) data for November 2024, indicating a 2.7% year-over-year increase. This marks the second consecutive month of rising inflation, following a 2.6% increase in October. Similar with PPI, the significant driver of the inflation was the rise in food prices. Challenges faced by farmers, including a bird flu outbreak and natural disasters like droughts and hurricanes, have disrupted food supply chains, leading to higher costs. The market anticipated that the upcoming release would likely to continue reflect inflationary pressures. The upcoming CPI report will be critical in confirming this outlook, influencing market expectations for rate changes later in the quarter.

Thursday, 16 January 2025, 15:30 – US Retail Sales (MoM) (Dec)

In November 2024, U.S. retail sales rose by 0.7% month-over-month, reaching $724.6 billion. This growth outpaced economists’ expectations of a 0.6% increase and exceeded the previous month’s 0.5% gain. Despite concerns about inflation and interest rates, consumer spending remained robust, supported by a strong labor market and wage growth. Factors such as increased automotive sales and growth in online retail also played a role in this performance. Given the strong results in November, December retail sales are expected to maintain their resilience, with the holiday season, a peak period for retail, likely to boost consumer spending further.

Friday, 17 January 2025, 12:00 – Eurozone CPI (YoY) (Dec)

As of December 2024, the Eurozone’s annual Consumer Price Index (CPI) increased by 2.4%, marking the third consecutive rise and surpassing the European Central Bank’s (ECB) 2% target. The uptick in inflation was primarily driven by higher energy prices, which contributed significantly to the overall increase. Persistent inflation in the services sector also played a role, with services inflation rising to 4% in December. Eurozone inflation is anticipated to remain sticky, hovering above 2% in the short term due to persistent energy costs, services inflation, and global supply chain disruptions.