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Processed pork being packaged at a factory in Shenyang, China, on Jan. 27. A drop in pork prices is expected to rein in the nation’s consumer inflation for January.

Photo: str/Agence France-Presse/Getty Images

Inflation data from the U.S. and China highlight this week’s economic calendar. Capitol Hill also will be closely monitored for the latest on U.S. fiscal policy.

WEDNESDAY

Inflation data from China is expected to show a mixed picture. The country’s producer-price index for January is forecast to rise 0.3% from a year earlier, the first time in a year factory-gate prices would post an annual gain and a potential sign of rising demand. China’s consumer inflation rate, however, is expected to fall back into negative territory amid a pullback in pork prices.

Economists are forecasting steady but slow gains for U.S. consumer prices in January. A jump in gasoline costs pushed the inflation index higher at the end of 2020 and could again at the start of this year, but underlying pressures are likely to remain contained while the pandemic suppresses demand.

Federal Reserve Chairman Jerome Powell speaks on the state of the U.S. labor market to the Economic Club of New York. The Fed is trying to boost economic activity by holding short-term interest rates near zero and buying $120 billion worth of bonds a month. Observers will watch Mr. Powell’s comments closely for signs of even subtle shifts in the central bank’s thinking.

THURSDAY

U.S. applications for unemployment benefits are expected to fall for the fourth week in a row, a sign that layoffs are easing following an unwelcome spike in early January. Even so, the number of jobless claims will likely remain well above their pre-pandemic level, underscoring the severe labor-market damage caused by the pandemic and efforts to contain it.

FRIDAY

The U.K., which will be releasing its first estimate of fourth-quarter gross domestic product, might have eked out a small gain in that period. But the GDP will still end the year well below its level at the end of 2019 after the country faced one of Europe’s deadliest Covid-19 outbreaks, repeated lockdowns and uncertainty related to Brexit. But a resurgent virus and another lockdown started in January suggest the outlook for the opening months of this year is once again bleak.

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