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Figures from the British Retail Consortium show that shop price annual inflation accelerated to 1.5% in January, up 0.8% in the previous month and the highest rate since December 2012. The increase was driven by food prices, which were up 2.7%.

January saw shop price inflation nearly double, driven by a sharp rise in non-food inflation. In particular, furniture and flooring saw exceptionally high demand leading to increased prices as the rising oil costs made shipping more expensive. Food prices continue to rise, especially domestic produce which have been impacted by poor harvests, labour shortages, and rising global food prices,” said Helen Dickinson, Chief Executive of the British Retail Consortium.

Rocketing food prices and the energy bill crisis drove inflation to 5.4% in the 12 months to December, up from 5.1% in November. Inflation hasn’t exceeded this level since March 1992, when it hit 7.1%. However, with gas and electricity costs expected to rise again in the spring, analysts predict that inflation will soon reach this level again.

The surge in energy and travel costs is now impacting disposable incomes and is likely to dent consumer’s willingness to spend. NielsenIQ research this month shows nearly a half of all households are saying that their most important concern at the moment is the rising cost of living,” said Mike Watkins, Head of Retail and Business Insight at NielsenIQ.

Data through January 2017, released by S&P Dow Jones Indices and Experian for the S&P/Experian Consumer Credit Default Indices, a comprehensive measure of changes in consumer credit defaults, shows the composite rate up three basis points from the previous month at 0.92% in January. The bank card default rate recorded a 3.21% default rate, up 26 basis points from December. Auto loan defaults came in at 1.06%, up three basis points from the previous month. The first mortgage default rate was 0.72%, up one basis point from December.

All five major cities saw their default rates increase in the month of January. Miami had the largest increase, reporting 1.67%, up 14 basis points from December. Miami's composite default rate is at a 31-month high. Dallas and Los Angeles both reported eight basis point increases from the previous month at 0.75% and 0.80%, respectively, in January. Chicago saw its default rate increase five basis points to 1.03%. New York reported a default rate increase of one basis point from the last month at 0.88%.

When comparing the bank card default rates among the four census divisions, the default rate in the south is considerably higher than the other three census divisions.

"While consumer credit default rates on mortgages and auto loans remain low and stable, default rates on bank cards have popped up to the highest level seen since July 2013," says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. "Recent data point to consumer optimism: retail sales rose 5.5% in January 2017 compared to a year earlier, consumer sentiment measures rose over the last two years, and employment and labor market conditions are favorable. Federal Reserve data on consumer credit and mortgage debt outstanding reveal that consumers are borrowing money.

"Current default levels do not present any immediate concerns for the economy. During 2004-2006, a period of strong retail sales and consumer spending, bank card defaults were higher than today. Moreover, even if interest rates were to increase much faster than the Fed or most analysts currently expect, the cost of borrowing money is unlikely to create problems for consumers. The weak spot, if there is one, would come with a rise in unemployment and an economic downturn."

The table below summarizes the January 2017 results for the S&P/Experian Credit Default Indices. These data are not seasonally adjusted and are not subject to revision.

S&P/Experian Consumer Credit Default Indices
National Indices
 Index January 2017
Index Level
December 2016
Index Level
January 2016
Index Level
Composite 0.92 0.89 0.96
First Mortgage 0.72 0.71 0.84
Second Mortgage 0.48 0.41 0.65
Bank Card 3.21 2.95 2.52
Auto Loans 1.06 1.03 1.04
Source: S&P/Experian Consumer Credit Default Indices
Data through January 2017

The table below provides the S&P/Experian Consumer Default Composite Indices for the five MSAs:

Metropolitan
Statistical Area
January 2017
Index Level
December 2016
Index Level
January 2016
Index Level
New York 0.88 0.87 1.04
Chicago 1.03 0.98 1.02
Dallas 0.75 0.67 1.11
Los Angeles 0.80 0.72 0.72
Miami 1.67 1.53 1.17

(Source: S&P/Experian Consumer Credit Default Indices)

The Fannie Mae Home Purchase Sentiment Index® (HPSI) increased by 2% in January to 82.7, ending a five-month decline. Four of the six components that comprise the HPSI were up in January.

The net share of Americans who believe that home prices will go up in the next 12 months rose by 7%, and the net share reporting significantly higher household income in the past 12 months rose by 5%. The net percentage of those who say that it is a good time to sell a house rose by 2%, while the net share of those who say it is a good time to buy a house fell by 3%. On net, consumers demonstrated slightly greater confidence about not losing their jobs, while the net share of those who believe mortgage rates will go down remained unchanged.

"Three months after the presidential election, measures of consumer optimism regarding personal financial prospects and the economy are at or near the highest levels we've seen in the nearly seven-year history of the National Housing Survey," said Doug Duncan, senior vice president and chief economist at Fannie Mae. "However, any significant acceleration in housing activity will depend on whether consumers' favorable expectations are realized in the form of income gains sufficient to offset constrained housing affordability. If consumers' anticipation of further increases in home prices and mortgage rates materialize over the next 12 months, then we may see housing affordability tighten even more."

Home Purchase Sentiment Index – Component Highlights:

Fannie Mae's 2017 Home Purchase Sentiment Index (HPSI) increased in January by 2% to 82.7. The HPSI is up 1.2 percentage points compared with the same time last year.

(Source: Fannie Mae)

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