HomeFinance NewsEconomyHeadline: Brace for Impact: Tuesday's Inflation Bomb May Shatter Market Stability

Headline: Brace for Impact: Tuesday’s Inflation Bomb May Shatter Market Stability


A key inflation reading is due out Tuesday morning. Here’s what to expect


Inflation, the rate at which prices for goods and services rise over time, remains an ongoing concern despite previous efforts to control it.

On Tuesday, the Labor Department’s Bureau of Labor Statistics will release its latest reading on the consumer price index (CPI), a key indicator of inflation.

Economists predict that inflation rose by 0.4% in February, slightly higher than the previous month’s 0.3% increase.

Excluding food and energy prices, the core inflation rate is expected to increase by 0.3%, also slightly higher than in January.

Over the past year, inflation has remained above the Federal Reserve’s target of 2%.

The headline inflation rate, which includes all goods and services, is expected to show a 3.1% gain, while the core inflation rate, excluding food and energy, is forecast to increase by 3.7%.

The resilience of inflation suggests that the Federal Reserve is unlikely to cut interest rates anytime soon.

Rising gasoline prices have put a floor under inflation, potentially reinforcing the Fed’s decision to take a more cautious approach.

While some downward pressure on inflation came from lower prices for travel, medical care, and other services, energy services rebounded, leading to higher gas prices.

Goods prices have also held their ground despite easing supply chain pressures and higher interest rates.

Wells Fargo has raised its full-year inflation forecast due to these factors.

The bank now expects core CPI inflation to run at a 3.3% rate this year and core personal consumption expenditures price inflation at 2.5%.

A survey conducted by the New York Fed revealed that respondents’ expectations for inflation at three- and five-year horizons have accelerated to 2.7% and 2.9%, respectively, well above the Fed’s target.

An Atlanta Fed measure of “sticky price” inflation, weighted toward items such as housing and insurance, remained elevated at 4.6% in January.

The Fed hopes that shelter costs will decrease, easing pressure on inflation gauges.

Before the Federal Open Market Committee meets next week, the Bureau of Labor Statistics will release the producer price index (PPI) on Thursday, measuring what producers get for their goods and services at the wholesale level.

This data will be considered by the Fed in its decision-making process.

  • Overall sentiment: neutral
  • Positive

    “Energy prices had eased earlier in the winter, putting some downward pressure on headline readings.”

    “On the brighter side, the House said lower prices on travel, medical care and other services helped keep inflation in check.”


    “Inflation’s resilience almost certainly will assure no Fed rate cuts at its meeting on April 30 to May 1, and possibly into the summer.”

    “But Wells Fargo estimates that energy services rebounded 4% in February, leading to an increase at the pump, where a gallon of regular gas is up about 20 cents, or more than 6%, from a month ago, according to AAA.”

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