Week Ahead: Inflation on the Mind

FOXBusiness

Everyone’s looking for signs of inflation, and two key economic releases next week should give some insight into where prices are going and what consumers are doing about it.

In addition, Dow Jones Industrial average member Alcoa (NYSE:AA) kicks off first-quarter earnings season with the release of its results after the markets close on Monday. Other significant earnings reports are due next week from banking powerhouses JPMorgan Chase (NYSE:JPM), out Wednesday, and Bank of America (NYSE:BAC), out Friday.

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A report on March retail and food sales is due on Wednesday. The numbers are widely expected to be lower than a year ago because the Easter holiday, which usually boosts spending, falls later this year.

Three separate inflation-related reports are due next week. All of them are expected to be impacted by rising fuel and food prices. The producer price index is set for release Thursday, while the consumer price index is out Friday. A report on import price indexes, due out Tuesday, is also expected to reflect the surge in oil prices due to fears of supply disruptions as political unrest roils oil producing countries in the Middle East.

There is considerable debate currently over whether the Federal Reserve should be interpreting rising commodity prices as a sign of growing inflation. Fed Chairman Ben Bernanke is on the record as saying rising food and fuel costs are “transitory” and should not serve as a catalyst for shifting Fed strategy toward a tighter monetary policy.

An important gauge of consumer sentiment is also due next week. The Reuters/University of Michigan Consumer Sentiment index is out Friday and economists believe the numbers should rebound somewhat from a poor March reading driven lower in the wake of the outbreak of political unrest in the Middle East.

A report on the international trade deficit is due Tuesday. That number could also be impacted by higher oil prices.

Initial jobless claims for the previous week due out Thursday are expected to fall as fewer workers file for benefits. The change is expected to be minimal, but moving in the right direction.

Also out next week is the Fed’s Beige Book, a report from the central bank’s 12 districts on economic activity in those regions.