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Nervous markets await latest US inflation data

Robert Chote,Economics Correspondent
Sunday 11 September 1994 23:02 BST
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THE FINANCIAL markets are expected to be in nervous mood ahead of tomorrow's US inflation figures, which will show whether wholesale price rises have fed through to the shops. A bad report will fuel fears of another rise in US interest rates next month.

World bond and stock markets tumbled on Friday after an unexpectedly big 0.6 per cent rise in US factory gate prices. Wall Street economists are uncertain whether the bad producer prices figure will be reflected at retail level.

Consumer prices are expected to have risen by 0.4 per cent in August but by only 0.2 per cent when car prices are excluded. Separate figures are expected to show the US current account deficit at dollars 31.9bn in the second quarter.

British retail price inflation figures, due on Wednesday, are expected to be unchanged on last month, perhaps falling a little. The underlying rate of inflation - excluding mortgage interest payments - was at a 27-year low of 2.2 per cent in July.

Factory gate inflation and average earnings growth figures, also due this week, will also be scrutinised closely for clues to the British inflation outlook. Unemployment is expected to have fallen by another 12,000, the same rate of decline as a month ago.

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