Gas Prices Likely to Affect Inflation Data

Reports on U.S. inflation this week probably will be influenced by higher prices at the gasoline pump--a problem that should start to abate, analysts said. The Labor Department’s producer price index, set for release Thursday, probably rose 0.6% in March as oil prices topped out at $32 a barrel, analysts said. That would follow a 1% increase in February, the largest rise in a decade. Prices have been tame when oil is excluded, though. Outside of food and energy, the PPI showed little change, rising 0.1% in March following a 0.3% increase during February. Oil prices have since retreated to about $25 a barrel since the Organization of Petroleum Exporting Countries agreed in late March to lift production levels. “Oil prices will peak out in the April report and keep sliding,” said Robert Dederick, an economic consultant at the Northern Trust Co. in Chicago.

Look for a similar pattern in the Labor Department’s consumer price index, which is set for release Friday. The CPI probably increased 0.5% in March, the same as in February, driven by petroleum prices. Excluding food and energy, the March increase probably amounted to 0.2%, the same as February, analysts said. The import price index, meanwhile, probably rose 0.9% in March after increasing 1.9% in February. The U.S. imports more than half its oil. The Labor Department is scheduled to release the import price report Wednesday.

Retail sales probably cooled a bit as the pace of auto sales slowed. The Commerce Department is expected to report on Thursday that sales increased 0.2% in March after rising 1.1% during February, analysts said. Outside of autos, sales probably increased 0.6% in March, after gaining 1% during February, analysts said. Last week, however, several U.S. retailers reported lower same-store sales in March mainly because the Easter holiday, typically the start of the spring shopping season, falls late in April this year.

The Federal Reserve will issue a report Friday showing output probably increased at the nation’s factories, mines and utilities, rising 0.2% in March after a 0.3% gain in February. The plant-use rate, which tracks the amount of capacity in use, probably held at 81.7%. Businesses, meanwhile, probably kept building their inventories to keep up with consumer demand. Business inventories, in a report due Friday, are likely to have increased 0.6% in February.