Tag Archives: Inflation

Fed’s Dudley confident U.S. inflation should rebound with wages

William C. Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York speaks during a panel discussion at The Bank of England in London,

y Jonathan Spicer

PLATTSBURG, NY (Reuters) – U.S. inflation is a bit low but should rebound alongside wages as the labor market continues to improve, an influential Federal Reserve official said on Monday, reinforcing the message that a recent patch of weak data is unlikely to derail plans to keep raising interest rates.

The comments by New York Fed President William Dudley, a close ally of Fed Chair Janet Yellen, were among the first after the U.S. central bank hiked rates last week in the face of a series of soft inflation readings.

“This is actually a pretty good place to be” with unemployment at 4.3 percent and inflation at about 1.5 percent, Dudley told the North Country Chamber of Commerce in Plattsburg, New York.

“We are pretty close to full employment,” he said. “Inflation is a little lower than what we would like, but we think that if the labor market continues to tighten, wages will gradually pick up and with that, inflation will gradually get back to 2 percent.”

Price readings have edged lower over the past few months, raising questions about the Fed’s general plan to boost rates one more time before the year-end, and another three times next year. Last week’s hike was the central bank’s third in six months.

Asked about a so-called flattening of yields in the bond market, which suggest investors are skeptical that this Fed policy-tightening cycle will last much longer, Dudley said pausing policy now could raise the risk of inflation surging and hurting the economy.

He said he did not read the market move as a negative signal for the U.S. economy, but rather one that reflects low overseas inflation and borrowing costs.

“I am very confident” that economic expansion “has quite a long ways to go,” Dudley said, adding he expected wage growth to rise to about 3 percent over the next year or two.

(Editing by Bernadette Baum)

Venezuela inflation so far this year at 128 percent: congress

Riot security forces members catch fire during riots at a rally against Venezuelan President Nicolas Maduro's government in Caracas, Venezuela, June 7, 2017. REUTERS/Carlos Garcia Rawlins

CARACAS (Reuters) – Inflation in Venezuela’s crisis-hit economy was 127.8 percent in the first five months of 2017, the opposition-led congress said on Friday in the absence of official data.

Economic hardship in the country, where many are skipping food and there are severe shortages, is helping fuel opposition protests that have led to at least 67 deaths in the last two months.

Various factors underlay the five-month price rise, including excess money-printing by the central bank, restrictions on imports and a recent devaluation of the bolivar, opposition lawmaker and economist Angel Alvarado said.

May inflation was 18.26 percent, he added, presenting the latest opposition-calculated index.

President Nicolas Maduro’s government has not published official data for more than a year.

Government opponents say Maduro and his predecessor, Hugo Chavez, have wrecked a once-prosperous economy with 18 years of state-led socialist policies ranging from nationalizations to currency controls.

The government says it is victim of an “economic war” led by opposition-linked businessmen.

(Writing by Andrew Cawthorne; Editing by Steve Orlofsky)

World food prices climb in May, import bill to rise in 2017: FAO

FILE PHOTO: Canadian pork shoulders are being prepped on a butcher's counter at North Hill Meats in Toronto, Ontario, Canada on May 10, 2017. Picture taken on May 10, 2017. REUTERS/Hyungwon Kang/File Photo

ROME (Reuters) – Global food prices rose in May from the month before after three months of decline, and the world’s food import bill is set to jump in 2017, the United Nations food agency said on Thursday.

Higher values for all food goods except sugar lifted prices on international markets 10 percent above the same month last year, the Food and Agriculture Organization (FAO) said.

Rising shipping costs and larger import volumes are due to push the cost of importing food globally to more than $1.3 trillion in 2017, FAO said.

This would be a 10.6 percent rise over 2016’s import bill, despite broad stability in markets buoyed by ample supplies of wheat and maize and higher production of oilseed products.

Poor countries that rely on imports to cover their food needs, and part of sub-Saharan Africa are on course for an even faster rise in their import costs as they buy in more meat, sugar, dairy and oilseed products.

All food categories except fish are due to add to rising import bills, as robust growth in aquaculture in many developing countries increasingly manages to meet domestic demand.

FAO’s food price index, which measures monthly changes for a basket of cereals, oilseeds, dairy products, meat and sugar, averaged 172.6 points in May, up 2.2 percent from April.

FAO trimmed its forecast for global cereals output in the 2017-18 season to 2.594 billion tonnes, down 0.5 percent year-on-year. Global wheat production is expected to decline 2.2 percent after a record harvest last year.

(Reporting by Isla Binnie, editing by Steve Scherer and Crispian Balmer)

Hundreds protest over minimum wage at McDonald’s stockholder meeting

Cooks, cashiers and other minimum wage earners join anti-Trump activists on a march for an increase in the minimum wage to $15/hour during a “March on McDonald’s” in Oak Brook, Illinois, U.S., May 24, 2017. REUTERS/Frank Polich

By Bob Chiarito

OAK BROOK, Ill. (Reuters) – Hundreds of fast-food workers demanded wage increases as they marched outside McDonald’s Corp <MCD.N> headquarters during the company’s annual shareholder meeting on Wednesday.

The demonstrators were part of a nationwide protest organized by “Fight for 15,” a labor group that has regularly targeted McDonald’s in calls for higher pay and union rights for workers.

More than two dozen protesters were arrested outside the United Continental Holdings Inc <UAL.N> shareholder meeting in downtown Chicago.

“I saw my mother, who worked 30 years for Hardee’s, struggle on food stamps to raise her family and now I’m doing the same thing,” said Terrance Wise, a 42-year-old from Kansas City, protesting outside the McDonald’s meeting in a Chicago suburb.

Wise, who has worked at McDonald’s for three years, said he earns $7.65 an hour working full time. He said he also relies on food stamps to support his three daughters.

“Instead of paying their CEO $15 million, they should give him $10 million and pay their workers what’s right,” he said. The main demand of “The Fight for 15” is a minimum wage of $15 an hour.

Chief Executive Officer Steve Easterbrook earned $15.3 million in total compensation last year, according to company data.

Shareholders inside the McDonald’s meeting did not ask about the protests during a question-and-answer session.

Easterbrook focused on the fast-food giant’s plans for delivering food with UberEats and the rollout of new products.

The company says it invests in its workers by helping them to earn college degrees and acquire on-the-job skills. In 2015, the company raised the average hourly pay to around $10 for workers in the restaurants it owns.

However, most McDonald’s workers in the United States are employed by franchisees who set their own wages.

Hopes for an increase in the $7.25-per-hour federal minimum wage were dashed last year when Republicans retained control of Congress in the U.S. elections last November. Opponents of an increase say higher costs would force restaurants to cut hiring, and some businesses would not survive.

Still, voters in Arizona, Colorado, Maine and Washington have approved minimum wage increases in their states, encouraging advocates to continue pressing their case at the local level. Workers on Wednesday also gathered outside of a McDonald’s store near downtown Los Angeles.

In Chicago, 30 protesters outside the United Continental meeting were arrested and cited for blocking a road, Chicago police said.

More than 100 protesters were arrested during nationwide demonstrations several weeks after Donald Trump won the White House in November. At various times on the campaign trail, Trump suggested U.S. workers were overpaid, but also that the minimum wage should be raised.

(Additional reporting by Anya George Tharakan in Bengaluru and Lucy Nicholson in Los Angeles; Writing by Timothy Mclaughlin in Chicago; Editing by Frances Kerry and Jeffrey Benkoe)

U.S. retail sales rise broadly; consumer prices rebound

FILE PHOTO - A employee walks by a meat cooler in the grocery section of a Sam's Club during a media tour in Bentonville, Arkansas, U.S. on June 5, 2014. REUTERS/Rick Wilking/File Photo

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. retail sales increased broadly in April while consumer prices rebounded, pointing to a pickup in economic growth and a gradual rise in inflation that could keep the Federal Reserve on track to raise interest rates next month.

The reports on Friday added to labor market data in suggesting the near stall in economic activity in the first quarter was an anomaly. But a moderation in year-on-year inflation led financial markets to dial down expectations of at least two more rate increases this year.

“The economy picked it up a notch from the slow start earlier this year, but the inflation fires are not burning brightly and this will likely keep the Fed on just a gradual pace for interest rate hikes later this year,” said Chris Rupkey, chief economist at MUFG Union Bank in New York.

The Commerce Department said retail sales rose 0.4 percent last month after an upwardly revised 0.1 percent gain in March. Sales rose 4.5 percent in April on a year-on-year basis.

Economists had forecast overall retail sales increasing 0.6 percent last month. Excluding automobiles, gasoline, building materials and food services, retail sales gained 0.2 percent after advancing 0.7 percent in March.

These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product.

The economy grew at a 0.7 percent annualized rate in the first quarter, held back by the weakest increase in consumer spending in more than seven years. The Atlanta Fed estimates GDP will rise at a 3.6 percent pace in the second quarter.

In a separate report on Friday, the Labor Department said its Consumer Price Index rose 0.2 percent after dropping 0.3 percent in March. The rise in prices suggested that March’s decline, which was the first in 13 months, was an aberration.

In the 12 months through April, the CPI increased 2.2 percent. While that was a slowdown from March’s 2.4 percent increase, it still exceeded the 1.7 percent average annual increase over the past 10 years.

Financial markets are pricing in more than a 70 percent chance of a rate hike at the Fed’s June 13-14 policy meeting, according to CME Group’s FedWatch program. But the likelihood the U.S. central bank will raise rates twice before the end of the year fell after Friday’s data.

The Fed lifted its benchmark overnight interest rate by 25 basis points in March and has forecast two more hikes this year.

Prices of U.S. Treasuries rose and the U.S. dollar <.DXY> weakened against a basket of currencies after the release of Friday’s data. U.S. stocks were trading mostly lower, pulled down by weak financial and industrial sectors.

‘COMPETITIVE PRESSURES’

Gasoline prices jumped 1.2 percent in April after falling 6.2 percent in March. Food prices rose 0.2 percent as prices for fresh vegetables recorded their biggest increase since February 2011.

The so-called core CPI, which strips out food and energy costs, edged up 0.1 percent last month, reversing March’s 0.1 percent dip. The monthly core CPI was restrained by declines in the prices of wireless phone services, medical care, motor vehicles and apparel.

Rental costs increased 0.3 percent after a similar gain in March. The core CPI increased 1.9 percent on a year-on-year basis, the smallest gain since October 2015, after rising 2.0 percent in March. Still, April’s increase was above the 1.8 percent average annual increase over the past decade.

“To some extent, this new weakness in price inflation is due to competitive pressures rather than weak demand, so the Fed can afford to discount it,” said Paul Ashworth, chief U.S. economist at Capital Economics in Toronto.

Consumer spending is being supported by a tightening labor market, marked by an unemployment rate at a 10-year low of 4.4 percent. A third report on Friday showed consumer sentiment rose in early May as the outlook for wages improved.

Motor vehicle sales increased 0.7 percent in April after three straight months of decreases.

There were hefty gains in sales at building material and electronics and appliance stores.

But sales at clothing stores fell 0.5 percent. Department store retailers have been hurt by declining traffic in shopping malls and increased competition from online retailers, led by Amazon.com <AMZN.O>.

Retailer J.C. Penney Co Inc <JCP.N> said on Friday its net loss widened to $180 million, or 58 cents per share, in the first quarter. On Thursday, Macy’s Inc <M.N> reported a 4.6 percent drop in first-quarter sales.

Sales at online retailers jumped 1.4 percent in April.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

Brazil readies $18.5 billion public spending plan: newspaper

FILE PHOTO: General view of a construction site of the railroad Transnordestina in the city of Salgueiro, Pernambuco state, northeast of Brazil, October 26, 2016. REUTERS/Ueslei Marcelino

SAO PAULO (Reuters) – Brazil plans to invest 59 billion reais ($18.50 billion) in public funds by the end of 2018 to accelerate the economic recovery and bolster aging infrastructure, newspaper Valor Econômico said on Wednesday.

More than a third of that, or 22.7 billion reais, would fund transportation projects, such as highways, railroads and airports, the report added, citing documents presented to ministers on Tuesday. The remaining funds would be distributed among three areas: housing, sewage and urban transit; defense; and health, education, water projects, tourism and sports.

President Michel Temer’s administration will propose the “Avançar,” or “Advance,” program to replace an ongoing plan known as PAC, Valor reported.

Representatives for the finance and planning ministries were not immediately available to comment.

Temer’s predecessor, Dilma Rousseff, introduced the PAC, or growth acceleration program, as her flagship policy in 2007 when she was chief of staff under leftist President Luiz Inácio Lula da Silva.

Economists have said the program had little effect on growth and weighed on public finances as Brazil’s economy, Latin America’s largest, slipped into its deepest recession in decades. Rousseff and center-right Temer have slashed PAC’s budget repeatedly in recent years to try to curb ballooning public debt and regain investors’ trust.

Increased public spending could make it harder for the government to plug a growing budget gap. It could also force additional austerity elsewhere at a time when the economy shows timid signs of recovery.

Temer has pursued a plan to streamline the country’s pension system to cut social security spending for years to come, triggering strong opposition. His infrastructure efforts have so far focused on privatization, with a successful airport auction in March demonstrating investors’ interest in Brazilian assets.

(Writing by Bruno Federowski; Editing by Lisa Von Ahn)

Brazil annual inflation in April likely hit lowest in nearly 10 years

FILE PHOTO: A woman looks on prices at a food market in Rio de Janeiro, Brazil, January 21, 2016. REUTERS/Pilar Olivares/File Photo

By Silvio Cascione

BRASILIA (Reuters) – Brazil’s annual inflation rate in April likely eased to its lowest level in nearly 10 years, which could help prod the central bank to make another steep interest rate cut this month, a Reuters poll showed on Monday.

The IPCA benchmark consumer price index was seen rising 4.10 percent in the 12 months through the end of April compared with a 4.41 percent increase in the year to the middle of the month, according to the median estimate of 26 economists surveyed. The data is due to be released on Wednesday.

Brazilian annual inflation has tumbled from a 12-year peak of 10.7 percent in January 2016 amid slack consumer demand stemming from a severe recession and the highest unemployment on record.

President Michel Temer has hailed the drop in inflation as evidence that his austerity agenda was putting Latin America’s largest economy on a solid footing for recovery.

As inflationary pressures have eased, the central bank has steadily cut its benchmark interest rate from 14.25 percent in October.

Last month, it slashed it by 100 basis points, taking it to 11.25 percent. It was the deepest cut to the rate in nearly eight years.

“The (inflation) numbers should strengthen the case for another 100 basis point cut this month,” said Leonardo Costa, an economist with the São Paulo-based consultancy Rosenberg & Associados.

On Monday, a central bank survey of economists forecast a central bank interest rate of 8.5 percent and 4 percent annual inflation by December.

In the month of April, consumer prices were expected to have increased 0.16 percent from March, slowing from a 0.25 percent rise in the previous month, according to the median of 28 forecasts in the Reuters poll.

Forecasts for the monthly inflation rate ranged between 0.12 percent and 0.27 percent, while estimates for the 12-month rate varied between 4.07 percent and 4.22 percent.

Housing and transportation prices probably fell in April, while education costs slowed their increase, according to economists in the Reuters poll.

A one-off cut in electricity rates also likely contributed to last month’s anticipated inflation slowdown, as the government reversed a tariff surcharge related to the Angra 3 nuclear power plant, economists said. The central bank, however, said last month that this drop, however sizable, should not have relevant implications for monetary policy.

(Reporting by Silvio Cascione Editing by W Simon)

U.S. inflation expectations edge up: NY Fed

A shopper walks by the sodas aisle at a grocery store in Los Angeles

NEW YORK (Reuters) – Measures of U.S. inflation rebounded slightly last month, according to a Federal Reserve Bank of New York survey released on Monday that also showed a sharp drop in Americans’ spending expectations.

The survey of consumer expectations, one of several gauges of prices for the U.S. central bank, showed median inflation expectations for one year ahead edged up to 2.8 percent in April, from 2.7 percent in March. The three-year measure was 2.9 percent, compared to 2.7 percent a month earlier.

The bump, which the New York Fed said was driven by those with lower income and education, keeps the price measures roughly in a range since late last year.

The central bank has raised interest rates twice since December in large part on expectations that inflation will keep edging higher.

The survey also showed median household spending growth expectations dropped to 2.6 percent last month, from 3.3 percent in March. It was the lowest level since the New York Fed began measuring in mid-2013.

The internet-based survey is done by a third party and taps a rotating panel of 1,200 household heads.

(Reporting by Jonathan Spicer; Editing by Chizu Nomiyama)

Frugal U.S. consumers seen holding back first-quarter GDP

People shop at The Grove mall in Los Angeles November 26, 2013. REUTERS/Lucy Nicholson

By Lucia Mutikani

WASHINGTON (Reuters) – The U.S. economy likely hit a soft patch in the first quarter as an unseasonably warm winter and rising inflation weighed on consumer spending, in a potential setback to President Donald Trump’s promise to boost growth.

Reduced business investment in inventories and government spending cuts also crimped gross domestic product growth. A Reuters survey of economists conducted last week forecast GDP rising at a 1.2 percent annual rate, but many economists lowered their estimates after the government on Thursday released advance reports on the goods trade deficit and inventories in March.

The Atlanta Federal Reserve is forecasting the economy growing at only a 0.2 percent rate in the first quarter, which would be the weakest performance in three years.

The economy grew at a 2.1 percent pace in the fourth quarter. The government will publish its advance first-quarter GDP estimate on Friday at 8:30 a.m. The expected sluggish first-quarter growth pace, however, is not a true picture of the economy’s health.

The labor market is near full employment and consumer confidence is near multi-year highs, suggesting that the mostly weather-induced slowdown in consumer spending is probably temporary. First-quarter GDP tends to underperform because of difficulties with the calculation of data that the government has acknowledged and is working to rectify.

“The weakness is not a reflection of the underlying health of the economy, part of it is residual seasonality,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania. “It has become more understood over the past few years, that’s why people often discount first-quarter GDP.”

Even without the seasonal quirk and temporary restraints, economists say it would be difficult for Trump to fulfill his pledge to raise annual GDP growth to 4 percent, without increases in productivity.

Trump is targeting infrastructure spending, tax cuts and deregulation to achieve his goal of faster economic growth.

On Wednesday, the Trump administration proposed a tax plan that includes cutting the corporate income tax rate to 15 percent from 35 percent, but offered no details.

ANEMIC CONSUMER SPENDING

Economists estimate that growth in consumer spending, which accounts for more than two-thirds of U.S. economic activity, braked to below a 1.0 percent rate in the first quarter. That would be the slowest pace in nearly four years and follows the fourth quarter’s robust 3.5 percent growth rate.

The expected weakness in consumer spending is blamed on a mild winter, which undermined demand for heating and utilities production. Higher inflation, which saw the consumer price index averaging 2.5 percent in the first quarter, also hurt spending.

Government delays issuing income tax refunds to combat fraud also weighed on consumer spending. Economists said Federal Reserve officials were likely to view both the anemic consumer spending and GDP growth as temporary when they meet next week. The Fed is not expected to raise interest rates.

“The good news is that the Fed in recent years has distanced itself from the GDP numbers,” said Lou Crandall, chief economist at Wrightson ICAP in Jersey City, New Jersey. “A weak first-quarter GDP print should not affect the policy debate.”

After contributing to GDP growth for two straight quarters, inventory investment was likely a drag in the first quarter. JPMorgan is forecasting inventories chopping off one percentage point from GDP growth. Trade was likely neutral after being a huge drag in the fourth quarter.

But some good news is expected. Business investment likely rose further, with spending on equipment seen accelerating thanks to rising gas and oil well drilling as oil prices continue their recovery from multi-year lows.

Investment in home building is also expected to have gained momentum in the first quarter.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

Eight electrocuted in Caracas looting amid Venezuela protests: firefighter

Police fire tear gas toward opposition supporters during clashes while rallying against Venezuela's President Nicolas Maduro in Caracas, Venezuela, April 20, 2017. REUTERS/Carlos Garcia Rawlins

By Eyanir Chinea and Efrain Otero

CARACAS (Reuters) – Eight people were electrocuted to death during a looting incident in Caracas, a firefighter said on Friday, amid violent protests against Venezuelan President Nicolas Maduro by opponents accusing him of seeking to create a dictatorship.

The accident occurred when a group of looters broke into a bakery in the working class neighborhood of El Valle, according the firefighter, who asked not be identified. It was not immediately possible to confirm details of the incident with hospital or other officials.

The public prosecutor’s office said later on Friday it was investigating 11 deaths in El Valle, adding that “some” victims had died from being electrocuted.

Nine other people have been killed in violence associated with a wave of anti-government demonstrations in the past three weeks in which protesters have clashed with security forces in melees lasting well into the night.

“Yesterday around 9 or 10 (p.m.)things got pretty scary, a group of people carrying weapons came down … and started looting,” said Hane Mustafa, owner of a small supermarket in El Valle, where broken bottles of soy sauce and ketchup littered the floor between bare shelves.

“The security situation is not in the hands of the government. We lost everything here,” said Mustafa, who said he could hear the looting from his home, which is adjacent to the store.

Dozens of businesses in the area showed signs of looting, ranging from empty shelves to broken windows and twisted metal entrance gates.

The Information Ministry did not immediately respond to a request for details.

Security forces patrolled much of Caracas on Friday, including El Valle.

Maduro’s government is so far resisting the pressure of the most serious protests in three years as opposition leaders push a series of political demands, drawing support from a public angered by the country’s collapsing economy.

Ruling Socialist Party leaders describe the protesters as hoodlums who are damaging public property and disrupting public order to overthrow the government with the support of ideological adversaries in Washington.

“This wounded and failed opposition is trying to generate chaos in key areas of the city and convince the world that we’re in some sort of civil war, the same playbook used for Syria, for Libya and for Iraq,” said Socialist Party official Freddy Bernal in an internet broadcast at 1:00 a.m.

‘WE’RE HUNGRY’

Opposition leaders have promised to keep up their protests, demanding that Maduro’s government call general elections, free almost 100 jailed opposition activists and respect the autonomy of the opposition-led Congress.

They are calling for community-level protests across the country on Friday, a white-clad “silent” march in Caracas on Saturday to commemorate those killed in the unrest, and a nationwide “sit-in” blocking Venezuela’s main roads on Monday.

Daniela Alvarado, 25, who sells vegetables in the El Valle area, said the looting on Thursday night began after police officers fired tear gas and buckshot at demonstrators blocking a street with burning tires.

“People starting looting the businesses and yelling that they were hungry and that they want the government out,” said Alvarado. “We’re afraid (the stores) are going to run out of everything, that tomorrow there won’t be any food.”

Separately, a man was killed by a gunshot in the Caracas slum of Petare on Thursday night, municipal mayor Carlos Ocariz said on Friday.

The OPEC nation’s economy has been in free-fall since the collapse of oil prices in 2014. The generous oil-financed welfare state created by late socialist leader Hugo Chavez, Maduro’s predecessor, has given way to a Soviet-style economy marked by consumer shortages, triple-digit inflation and snaking supermarket lines.

Many Venezuelans say they have to skip meals in order to feed their children.

Public anger at the situation spilled over last month when the Supreme Court, which is seen as close to the government, briefly assumed the powers of the Congress. The protests were further fueled when the government barred the opposition’s best-known leader, two-time presidential candidate Henrique Capriles, from holding public office.

(Additional reporting by Carlos Garcia and Brian Ellsworth; Writing by Brian Ellsworth; Editing by Alexandra Ulmer and Frances Kerry)