US CPI: More strength in core inflation to come - Wells Fargo


Analysts from Wells Fargo continue to see a firm trend in infaltion in the US despite today’s data that showed a decline in March of 0.1% in CPI. 

Key Quotes: 

“CPI inflation fell 0.1 percent in March, the first monthly decline in a year. March’s decline can be entirely traced to energy, where prices fell 2.8 percent. The cost of energy services dipped slightly last month, but the primary source of the pullback was a 4.9 percent drop in gasoline prices. Elsewhere, however, price gains were stronger and point to inflation continuing to firm.”

“After what had been the strongest three-month run in 10 years, the core index increased 0.2 percent (0.18 percent).”

“It was this time last year that core inflation posted a surprising decline due to the now-infamous drop in wireless services. The index fell 0.1 percent—a rare event outside of a recession. With the drop now a full year behind us, the 12-month rate of core inflation jumped from 1.8 percent to 2.1 percent. 

While the 12-month change has been helped by an easy base comparison, we believe there is more strength to come even without such a favorable comparison over the next few months. Core CPI has increased at a 2.9 percent annual rate over the past three months, which points to the year-ago rate of core CPI climbing a bit further in the months to come. We look for the core index to increase 2.2 percent year-over-year in the second quarter.”

“FOMC Chair Powell and other members have been aware of the favorable arithmetic surrounding the year-ago rate of core inflation, so the jump in March is unlikely to alter their view of inflation. What we believe is likely to be more influential in the Fed’s thinking is the strength that has prevailed since late last year, as well as broadening indications of higher input costs for labor and raw materials.”

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD advances above 1.14 after unchanged ECB, mixed US data

EUR/USD is trading above 1.14, higher after the ECB left policy unchanged and called governments to act. US retail sales beat with 7.5% while jobless claims disappointed with 1.3 million. US coronavirus figures are showing further increases in cases.

EUR/USD News

GBP/USD advances above 1.26 amid mostly upbeat US, UK data

GBP/USD is trading above 1.26, higher. The UK jobs reports showed low unemployment but also depressed wages. US retail sales beat expectations but jobless claims remain high. 

GBP/USD News

Gold trades with modest losses, downside remains limited

Gold witnessed a modest intraday pullback amid a pickup in the USD demand. The prevalent risk-off mood extended some support to the safe-haven metal. A sustained break below $1800 is needed to confirm a bearish break.

Gold News

Why is the crypto market falling today?

War for dominance impacts the market and heralds several days of turbulence. Fight between Bitcoin and Ethereum hurts the Altcoin segment, which is largely overbought after weeks of euphoria. Ripple is the most affected of the Top 3 and steps back into a high-risk environment.

Read more

Oil : The price action seems indecisive at these elevated levels

WTI is still in a bull trend on the chart below but at these elevated levels, it seems the price seems to be very jittery. Previously within this trend when the price moved higher the size of the bullish candles was bigger. 

Oil News

Forex MAJORS

Cryptocurrencies

Signatures