The US Bureau of Labor Statistics (BLS) will release the most important inflation measure, the US Consumer Price Index (CPI) figures, on Tuesday, March 14 at 12:30 GMT. As we get closer to the release time, here are the forecasts by the economists and researchers of 10 major banks regarding the upcoming United States inflation print for the month of February.
The annual inflation is expected to decline to 6.0% from 6.4% in January, while the Core CPI, which excludes volatile food and energy prices, is seen at 5.5% from 5.6%. On a monthly basis, the CPI is forecast at 0.4%, while the Core CPI is also expected at 0.4%.
“A further increase in prices at the pump and continued pressure in core categories suggest that prices rose by an uncomfortably fast 0.4% in February. Looking at core (ex. food and energy) categories, shelter prices are set to peak imminently as the typical lags with new leases that are resetting at lower rates kick in, but continued pressure in core services outside of shelter, in line with the tight labor market, will keep the Fed on a tightening path. Moreover, the deflation in core goods prices appears to have ended, as supply chains have normalized, and used car prices as measured by industry gauges climbed in February. A consensus-matching core CPI reading will likely be good enough to keep the Fed on track for a 25 bps hike this month.”
“We look for another monthly increase of 0.4% in the overall CPI in February, which would put the YoY rate at 6.0%. We still see inflation set to grind lower, but the process is likely to be bumpy and take time. Despite some directional improvement over the past couple of quarters, prices are still growing well-above the Fed's 2% target, and the tight labor market suggests that there are still inflationary pressures that could forestall a full return to 2% inflation.”
“We expect a softer 0.4% MoM increase in headline CPI due to a retracement of utility gas prices in line with falling natural gas prices. Details should reveal continued strength in key services prices, although starting with February data could be the start of an expected slowing in shelter prices which comprise close to 40% of core CPI. Other non-shelter services should be strong overall, although with a continued drag from the medical insurance component in CPI which notably will not be included in PCE inflation. Prices for medical services themselves, however should remain strong, as should prices for recreation services and transportation services, including a 1.5% MoM bounce back in airfares. Rather than services which should remain consistently strong, the pick-up in core CPI relative to the previous two months should come from goods prices. Most notably, we expect recently rising wholesale measures of used car prices to start to feed through to stronger car prices in CPI.”
“We expect US core CPI inflation to increase by 0.4% MoM and headline CPI to rise by 0.5% in February.”
“In February, although the headline inflation rate is likely to have fallen from 6.4% to 6.1%, the core rate probably fell only slightly from 5.6% to 5.5% and thus remains far too high. At 0.5%, the MoM rate of the core index is likely to be above average again. From the Fed's point of view, such a report would probably not provide convincing enough support for the ‘disinflation process’ identified by Fed Chairman Powell and would therefore argue in favor of stronger interest rate hikes again.”
“We expect core CPI inflation to remain steady at 0.4% MoM in February, causing the YoY reading to tick down to 5.5%. Energy and food prices are likely to moderate, with headline inflation also coming in at 0.4% MoM. A reading in-line with our expectations would be uncomfortably high for the Fed, but still consistent with gradual disinflation this year.”
“We think the headline CPI and core CPI will both round to 0.4% MoM which is where the consensus is. This will translate to headline dropping 0.4pp to 6% YoY and core down a tenth to 5.5% YoY.”
“We expect Tuesday’s report to show the YoY measure falling to 5.9% in February compared to 6.4% January (which was the lowest reading since October 2021). Much of that easing has come from lower energy prices and signs that food price growth is past its peak. Inflation pressures across other goods and services has also been edging lower, though stickier than expected in recent months. We expect the February numbers to look better with ‘core’ inflation (which excludes food and energy products) dipping to 5.4% from 5.6% in January. Robust US labour market data indicates strong economic momentum at the start of 2023, and stickier inflation suggests it may take longer to get back to the 2% target. This is bolstering the case for further interest rate hikes from the Fed.”
“The energy component may have had only a limited effect on the headline index, with prices remaining more or less flat in this segment in the month. Expected gains for shelter, used vehicles and airline fares could still result in a 0.4% monthly increase in headline prices. The core index may have seen a similar rise, which would translate into a one-tenth drop in the annual rate to 5.5%.”
“Core prices likely gained momentum in February with the index rising a strong 0.5% MoM, as we look for the recent large relief from goods deflation to start normalizing. Shelter inflation likely remained the key wildcard, while slowing gasoline and food prices will likely dent non-core CPI inflation. Our MoM forecasts imply 6.1%/5.5% YoY for total/core prices.”
About US inflation numbers
Price stability is one of the two mandates the Federal Reserve has to decide on its monetary policy (the other one being full employment). Therefore, inflation numbers are some of the economic indicators more heavily scrutinized by central bankers and market players.
Consumer inflation numbers in the United States are tracked mainly through two different measures – the US Consumer Price Index report, published by the Bureau of Labor Statistics, and the Personal Consumption Expenditures numbers, released by the Bureau of Economic
Analysis through its Personal Income and Outlays report. The second one is the preferred Fed measure for inflation, where the US central bank sets its intended 2% target. When numbers deviate largely from this target, the Federal Reserve usually has to take an aggressive stance on its monetary policy.
That said, the CPI inflation report is usually the one the markets react more sensibly to, as it is always published a couple weeks before, acting as a de-facto leading indicator for the PCE report.
Both inflation reports are released in a monthly basis, and include headline figures and "core" figures. The latter are usually the ones most heavily looked at, as they provide price behaviour through a bag of goods that exclude volatile items such as food or energy.
Other inflation measures are provided in sub-indicatores published on other major data reports, such as the Prices Paid sub-indexes in the ISM Manufacturing and Services PMIs, the Average Hourly Earnings included in the jobs report or the Consumer Inflation Expectations released through the University of Michigan Consumer Sentiment survey.
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Follow us on Telegram
Stay updated of all the news
EUR/USD trims gains after reaching weekly highs at 1.0925 Premium
EUR/USD peaked at 1.0925 on Thursday, the highest level in a week, then retreated to the 1.0900 area. The pair is holding on to strong daily gains, on its way to the highest daily close since early February, supported by a weaker US Dollar ahead of Friday’s US Core PCE data.
GBP/USD eyes 1.2400 as Pound outperforms
The Pound is among the top performers of the American session. GBP/USD is trading at the highest level in almost two months, near 1.2400. Risk flows are helping the pair while at the same time making it difficult for the US Dollar to find demand.
Gold: Bulls aiming to challenge the $2,000 threshold Premium
Spot Gold found demand during American trading hours and currently trades around the $1,980 level. Following a consolidative stage, the bright metal gained upward traction on the back of continued US Dollar weakness.
Cardano might have a bumpy road following a 25% recovery
Cardano price has had a disappointing run these last two weeks when compared to other major altcoins.
FTSE100 up for 4th day in a row, hits 2-week high
We’ve seen another positive day for European markets with the FTSE100 pushing up to its highest levels in 2 weeks, although it remains well short of reversing its March losses, unlike the DAX which has reversed nearly all its post 9th March decline.