With CPI having slapped some macro-sense back into people's minds after a week focused on SVB's fallout, this morning's PPI and Retail Sales data could further that trend - despite Credit Suisse grabbing everyone's attention today so far.

Producer Prices unexpectedly soared in January and analysts expected February data to show a slowdown in an acceleration of prices. It did dramatically, dropping 0.1% MoM (+0.3% MoM exp) to its lowest YoY since March 2021...

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Source: Bloomberg

The pipeline for PPI is also now dragging the headline even lower...

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Source: Bloomberg

Who could have seen that coming?

There is now less pipeline inflation than final; next 2-3 months PPI will accelerate to downside pic.twitter.com/t8C01boDGv

— zerohedge (@zerohedge) February 16, 2023

And PPI is now leading CPI lower...

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Source: Bloomberg

With price rises slowing, retail sales (measured nominally) were expected to shrink in February and they did, down 0.4% MoM as expected...

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Source: Bloomberg

That is the lowest YoY rise in retail sales since Dec 2020...

Verdict: January's spending spree was a one-time outlier

"The latest BAC card spending data suggest that the acceleration in consumer spending might have been more short-lived than we were expecting. Card spending per household slowed to 1.3% y/y in the week ending Feb 25" - BAC pic.twitter.com/MPyyV89lWD

— zerohedge (@zerohedge) March 3, 2023

Excluding gasoline and autos, retail sales were flat.

Nine out of 13 retail categories fell last month, led by furniture and restaurants.

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The report showed vehicle sales declined by 1.8% in February. The value of sales at gasoline stations decreased by 0.6%, likely reflecting lower prices in the month.

It looks like the 'lag' from monetary policy is catching us up.

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