Wall Street points modestly higher ahead of inflation report

Wall Street pointed slightly higher in premarket trading Friday as investors await the government’s final inflation-related report of the year.

Futures for the S&P 500 rose 0.2% and futures for the Dow Jones Industrials were up 0.3%.

On tap Friday is the Commerce Department’s consumer spending report for November, which includes measure of inflation that is closely monitored by the Federal Reserve. The report for October showed that inflation eased somewhat, with prices rising 6% in October from a year earlier. That was the smallest increase since November 2021.

Analysts surveyed by data firm FactSet expect that number to have fallen further, to 5.5% in November. That would be good news for American consumers, who have been squeezed by higher prices for just about everything for the past year-and-a-half.

The Fed is believed to monitor the inflation gauge in the consumer spending report, called the personal consumption expenditures price index, even more closely than it does the government’s better-known consumer price index. But whether a projected half-percentage point decline would move Fed policymakers to soften their stance on future rate hikes remains to be seen.

Last week, the central bank boosted its benchmark rate a half-point to a range of 4.25% to 4.5%, its highest level in 15 years. More surprisingly, the policymakers forecast that their key short-term rate will reach a range of 5% to 5.25% by the end of 2023. That suggests that the Fed is poised to raise its rate by an additional three-quarters of a point and leave it there through next year. That has many economists and investors expecting the U.S. economy to fall into recession in 2023.

Japan reported its core inflation rate, excluding volatile fresh foods, rose to 3.7% in November, the highest level since 1981, as surging costs for oil and other commodities added to upward price pressures in the world’s third-largest economy.

While the rate was much lower than in the U.S. and most major European and emerging economies, it adds to pressure on the Bank of Japan to adjust its own policies that have kept interest rates ultra-low to spur growth. For Japan, deflation — falling prices — rather than inflation has been the key concern for most of the past few decades. Recession in coming months remains the greater concern, economists say.

“Inflation edged up in November and will peak at around 4% around the turn of the year, but we expect it to fall back below the Bank of Japan’s 2% target…