US: Double inflation data test for Fed – Deutsche Bank

Deutsche Bank's Jim Reid and colleagues expect a firmer US headline CPI than core in February, driven by higher energy prices, with year-on-year headline inflation near 2.4% and core edging slightly lower. Core PCE is forecast to accelerate to 0.42% month-on-month and 3.1% year-on-year, making this week’s CPI and PCE releases crucial ahead of the March FOMC meeting.

CPI and PCE seen slightly firmer

"It's a unique double dose of key US inflation reports with CPI (Wednesday) and core PCE (Friday) reporting in the same week for the only time as far as I went back to check."

"For this week's US inflation numbers, our economists expect February CPI to show firmer headline inflation than core, largely reflecting higher energy prices."

"Headline CPI is forecast to rise around 0.27% on the month, compared with roughly 0.24% for core."

"On a year over year basis, headline inflation is expected to remain broadly unchanged near 2.4%, while core inflation should edge modestly lower (2.50% to 2.46%)."

"Friday’s personal income and spending report will round out the inflation picture and deliver January’s core PCE reading. Based on earlier CPI and PPI data, core PCE inflation is expected by our economists to rise 0.42% on the month (vs. 0.36% last time), lifting the year over year rate around a tenth to 3.1%."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)