March CPI preview: Beware of still water

Wells Fargo Research Team Wells Fargo

Summary

The March CPI data will feel dated following President Trump's announcement of significantly larger tariffs across trading partners, but should shed some light on how the changing trade environment was already beginning to affect pricing. We estimate headline CPI was unchanged in March, leading the year-ago rate to sink to a six-month low of 2.5%. The details are likely to prove less encouraging than the headline as the drag from energy goods was fanned by growth concerns, core goods inflation was already on the upswing and services disinflation remains frustratingly slow. We estimate the core CPI advanced 0.2% again last month, bringing the year-over-year rate to nearly a four-year low of 3.0%. March now looks set to mark the nadir in core inflation this year, however, as the administration's efforts to reorient U.S. trade lead to faster price growth.

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Wells Fargo Research Team

Wells Fargo

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