US CPI Prep

On Wednesday, 11th March at 08:30 ET, the BLS is set to release the US CPI report for February.
Here are some views on what to expect.

General Expectations
Forecasts subject to change
YoY – Forecast: 2.4% | Prior: 2.4% | Range: 2.6% / 2.3%
MoM – Forecast: 0.3% | Prior: 0.2% | Range: 0.4% / 0.1%
Core YoY – Forecast: 2.5% | Prior: 2.5% | Range: 2.6% / 2.3%
Core MoM – Forecast: 0.2% | Prior: 0.3% | Range: 0.4% / 0.2%

What to Expect
US Stocks
A cooler-than-expected February CPI print could support equities, particularly rate-sensitive sectors such as technology and consumer discretionary, as it strengthens expectations for interest-rate cuts.
A hotter-than-expected reading may weigh on stocks, tightening financial conditions and reinforcing concerns about prolonged restrictive policy.
US Dollar
Stronger inflation data typically supports the U.S. dollar, as it reduces expectations for near-term Federal Reserve easing.
A softer CPI print may pressure the dollar, with markets leaning toward a more dovish policy outlook.
US Government Bond Yields
Higher-than-expected inflation would likely push yields higher, reflecting delayed rate-cut expectations and persistent inflation risk.
Lower inflation readings generally lead to lower yields, as markets price in easing and reduced inflation pressure.
Federal Reserve Policy
A firm February CPI — especially in core services — would reinforce a higher-for-longer stance, encouraging the Fed to remain cautious about easing.
A softer inflation profile would strengthen the case for a more accommodative policy path, increasing confidence that inflation is moving sustainably toward target.

Commentary
Credit Agricole
February CPI is expected to come in relatively soft, with core prices projected to rise about 0.24% on the month. That would leave the three-month annualised pace of core inflation around 3.1%, slightly below the levels seen before the late-2025 government shutdown. On a yearly basis, headline inflation is expected to remain roughly steady near 2.4%, while core inflation may edge slightly lower to about 2.5%. The current forecast suggests little immediate impact from the Iran conflict on inflation data.

Despite the relatively benign CPI trend, the Federal Reserve focuses more closely on PCE inflation, which has remained stickier and has shown limited progress toward the 2% target over the past two years. The Fed still delivered three rate cuts late in 2025 as the labour market softened, but signs of stabilisation in employment helped justify the pause that began earlier this year.

Looking ahead, the path for policy will depend on how the two sides of the Fed’s mandate evolve. Further labour market weakness could reopen the door to additional easing, while a stabilising jobs market would shift the burden back onto inflation to fall further, particularly in PCE. The conflict in the Middle East adds another layer of uncertainty, especially through oil prices, reinforcing the likelihood that the Fed stays on hold while it assesses whether the recent energy shock proves temporary or persistent.

Bank of America
The February CPI report is expected to show that consumer price pressures remain broadly contained. Both headline and core inflation are projected to rise about 0.3% month-on-month, a pace consistent with the relatively steady inflation trend seen in recent months. Such an outcome would likely leave the Federal Reserve’s near-term policy outlook largely unchanged, as the data would not provide a strong signal that inflation is either reaccelerating or falling sharply.

What may matter more for policymakers is the evolving inflation risk from energy markets. The escalating conflict in the Middle East has pushed oil prices higher and raised concerns about supply disruptions, which could eventually feed through into broader price pressures. Energy shocks can quickly transmit into consumer inflation through fuel costs and production inputs, potentially complicating the disinflation process if they persist.

For now, the Fed is likely to treat the February CPI report as confirmation that inflation remains manageable, while focusing more closely on whether higher oil prices begin to lift inflation expectations or spill over into other parts of the economy in the months ahead.

Citi
February CPI is unlikely to alter the near-term path for Federal Reserve policy, but it will provide another read on how seasonal distortions in inflation are evolving this quarter. Early-year inflation prints have tended to run hot in recent years, so February’s release will help determine whether that pattern is repeating in 2026.

Core CPI is expected to rise around 0.23% month-on-month, a step down from January’s 0.30% increase. Some goods categories may still show stronger start-of-year price adjustments, but services inflation is projected to soften. Shelter, which has been one of the most persistent drivers of inflation, is expected to continue gradually slowing.

If these trends materialize, the report would reinforce the view that underlying inflation pressures are easing, even if the overall pace of disinflation remains gradual. For policymakers, the key takeaway will be whether services and housing inflation continue to moderate as expected.

Previous Release
On February 13th, the BLS released the January CPI report.
US inflation cooled further in January, with headline CPI rising 2.4% year-on-year, down from 2.7% previously and below expectations. On a monthly basis, prices increased 0.2%, softer than forecast. Core CPI matched expectations at 2.5% year-on-year, easing slightly from the prior month, while monthly core inflation came in at 0.3%. The closely watched supercore measure edged lower on an annual basis, though its monthly pace picked up notably.

Looking at the composition, energy was a key drag on the headline figure, with gasoline prices falling sharply over the month. Shelter remained the largest contributor to monthly gains, though rent and owners’ equivalent rent rose at a moderate pace. Food prices increased modestly. Within core, services inflation remained firm, with airline fares, medical care, personal care, and recreation posting solid gains. By contrast, several goods categories helped offset the pressure, including declines in used cars, household furnishings, and motor vehicle insurance.

Markets read the report as dovish at the margin. Traders increased the odds of additional Fed rate cuts this year, with pricing now implying roughly a 50% chance of a third cut. The dollar and Treasury yields weakened on the release, while the S&P 500 strengthened, as investors focused on the continued disinflation in headline and core measures despite some lingering firmness in services.