US CPI Prep
On Thursday the 10th of April, at 08:30 ET, the BLS is set to release the latest US CPI report for the month of January.
Here are some views on what to expect.
Overview
Forecast subject to change
For headline CPI YoY, the forecast is 2.5%, on the prior of 2.8%.
According to a survey of 36 qualified economists, the highest estimate is 2.8%, and the lowest is 2.5%
For headline CPI MoM, the forecast is 0.1%, on the prior, 0.2%.
The highest estimate is 0.2%, and the lowest is 0%
For Core CPI YoY, the forecast is 3%, down from the prior of 3.1%.
The highest estimate is 3.1%, and the lowest is 2.9%.
Core CPI MoM has a forecast of 0.3%, on the prior of 0.2%.
The highest estimate is 0.5%, the lowest is 0.2%.
General Expectations
If CPI comes in higher than expected, we would expect to see weakness in US stocks, and strength in the dollar and government bond yields, as this would cause markets to pull back further on bets for further Fed interest rate cuts, as rates may need to stay higher for longer in this environment to make sure inflation is coming sustainably down to the Fed’s target.
If CPI came in lower than expected, we would expect strength in US stocks, and weakness in the dollar and government bond yields, as this would indicate that inflation is continuing to come down to the Fed’s target, which could increase the likelihood that the Fed can move forward with further interest rate cuts.
Commentary
Wells Fargo
The March CPI report, due Thursday, is expected to show no change in headline inflation on a month-over-month basis, bringing the annual rate down to 2.5%, its lowest in six months. However, the softer headline number is primarily due to a sharp drop in energy goods prices—likely the largest monthly decline in over two years—driven by concerns over slowing economic growth and favorable seasonal adjustments. While some food staples, such as eggs, saw price declines, increases in other grocery categories likely offset any broader relief in food-at-home inflation.
Core inflation, which excludes volatile food and energy prices, is estimated to have risen 0.2% month-over-month for a second straight month, pushing the year-over-year rate down to 3.0%, the lowest since mid-2020. While this marks progress, the underlying details may prove less encouraging. Core goods inflation is beginning to rise again, and disinflation in services continues at a frustratingly slow pace. As a result, despite the headline improvement, the report may not significantly ease concerns about inflation’s persistence, especially in light of recent trade policy shifts that could reignite price pressures going forward.
Unicredit
The March CPI report is expected to show that while headline inflation remained relatively mild—rising just 0.1–0.2% month-over-month due to a sharp drop in gasoline prices—underlying inflation pressures were building. Core CPI likely accelerated to 0.3% month-over-month from 0.2% in February, with the year-over-year rate holding at 3.1%. Meanwhile, headline inflation likely eased to 2.6% from 2.8% annually.
The uptick in core inflation appears to be driven by rising core goods prices, influenced by front-loaded consumer demand and newly implemented tariffs on imports from China, Mexico, Canada, and key industrial metals. Additionally, strong early-year wage growth likely fueled a pickup in non-housing core services inflation, while housing inflation remained stable due to its usual lagged adjustment. With inflation still above the Fed’s target and fresh tariff-related pressures on the horizon, the central bank is expected to hold rates steady at its May 6–7 meeting.
Société Générale
Headline inflation readings are expected to stay low, mainly due to a sharp drop in energy prices, driven by seasonal adjustment effects. While gas prices usually rise in March, seasonal factors typically smooth that increase. On an unadjusted basis, gas prices have slightly declined, and after adjustment, motor fuel prices in the CPI are expected to fall around 6%, anchoring the overall CPI. Egg prices have also dropped—small in weight but widely watched.
Within core CPI, shelter costs, particularly Owners’ Equivalent Rent (OER), are slowly easing. This is a positive sign, but the deceleration is happening too gradually to offer strong reassurance. For March, the OER component is expected to rise just under 0.3% (around 0.28%), reflecting ongoing but modest moderation.
Previous Release
On March 12th at 08:30 ET, the BLS released the US CPI report for February.
Headline CPI YoY came in lower than expected at 2.8%, from the forecast of 2.9%, and down from the previous 3%.
Headline MoM came in lower at 0.2%, down from the expectations of 0.3%, and the prior of 0.5%.
Core CPI YoY come in lower than expected as well, at 3.1%, on expectations of 3.2% and down from the prior of 3.3%.
Core CPI MoM came in at 0.2%, on expectations of 0.3%, and the prior of 0.4%.
This caused an unsustained reaction, but initially created weakness in the dollar, and strength on stocks and bond yields.
