Inflation tame in February

The data flow yesterday lent weight to the view that inflationary pressures may be abating.

Data yesterday showed some cooling in the US economy. As Reuters reports, they include data on inflation:

The consumer price index edged up just 0.1 percent in February as energy prices fell, the Labor Department said. But the core rate, which strips out food and energy costs, also rose just 0.1 percent...

Over the past 12 months, consumer prices have risen 3.6 percent, marking a deceleration from the energy-led 4 percent gain posted in the period through January. The 12-month change in the core CPI held steady at 2.1 percent.

...manufacturing:

[T]he Philadelphia Federal Reserve Bank said its gauge of factory activity in the U.S mid-Atlantic region fell to 12.3 in March from 15.4 in February, signaling a sharper slowing than Wall Street had expected...

The Philadelphia Fed's factory survey also offered upbeat inflation news as the measure of prices paid by manufacturers fell sharply in March to its lowest level since August 2003.

...housing:

[T]he Commerce Department said housing starts, completions and permits for future building all dropped in February...

In its report, the Commerce Department said housing starts dropped 7.9 percent in February to a 2.120 million unit annual pace from an upwardly revised 2.303 million unit in January.

The drop, however, followed a big jump in January due to warm weather and was not as sharp as economists had expected.

...and the labour market:

[N]ew claims for U.S. jobless benefits unexpectedly edged up by 5,000 last week to 309,000, the highest level of the year.

This pushed a four-week moving average of claims, which offers a better view of underlying trends, up by 2,750 to 296,500. While the average is at its highest since mid-January, it still suggests a robust labor market.

There is also little evidence of accelerating inflation in Europe. The annual inflation rate for February was 2.3 percent for the euro zone, down from 2.4 percent in January, and 2.2 percent in the EU25, unchanged from January. Inflation excluding energy, food, alcohol and tobacco in the euro zone was unchanged in February from the previous month at 1.2 percent.

In China, the corporate goods price index rose 0.5 percent in February over the previous month, but the year-on-year increase was only 0.7 percent. This despite an investment climate that still remains hot. From AFP/CNA:

China's fixed asset investment expanded at a brisker pace in the first two months of the year, official figures show, belying government efforts to peg growth at a more sustainable pace.

Capital spending on plant, roads and power grids in urban areas rose 26.6 percent year-on-year in January and February, the National Bureau of Statistics said.

In the UK, there was more evidence of re-accelerating house prices from the Royal Institution of Chartered Surveyors while February retail sales showed some recovery from a dismal January.