Here are the predictions ahead of tomorrow’s March report:
- CPI +0.9% m/m (pre +0.3%)
- CPI +3.3% y/y (pre +2.4%)
- Core CPI +0.3% m/m (pre +0.2%)
- Core CPI +2.7% y/y (prior +2.5%)
Even though it will be a case of energy prices driving headline inflation, core prices are also expected to see some impact. And the main point is that the longer the US-Iran conflict drags on, the deeper and more damaging its impact on consumer behavior and business pricing in general will be.
There is also some belief that the rise in prices will be even greater in April. However, let’s leave that for a separate discussion.
Looking ahead to yesterday’s inflation data, some leading analysts are saying the following:
BofA
– “Energy-led CPI inflation is likely to rise in March. The March CPI report should reflect the early effects of the Iran war. We estimate headline CPI to rise by 0.9% m/m (0.91% unrounded) due to a 10.6% m/m rise in energy prices. Meanwhile, core CPI is expected to soften by 0.3% m/m (0.26% unrounded). The headline NSA index should print at 330.762. The market and our focus will be on PCE inflation implications after the very strong core PCE print in recent months.”
– “Core CPI details. While our forecast for Core CPI is cooler than headline CPI, it still implies a 3.1% annual rate, the level above generally consistent with a 2% core PCE. In terms of details, we expect a 1% m/m pop in used cars to contribute to a 0.23% m/m increase for core goods. Core services likely to rise by 0.28% m/m “Shelters should remain relatively optimistic due to cooler rent inflation. However, non-housing services inflation is likely to rise slightly this month.”
Goldman Sachs
– “We expect a sharp increase in energy prices to result in a 0.87% increase in headline CPI in March. Our forecast projects a larger increase in headline CPI inflation from 2.43% to 3.28% year-on-year. Energy prices are likely to rise sharply again in April, bringing headline CPI inflation to around 4%.”
– “We forecast a 0.28% increase in core CPI, which would push the year-on-year rate to 2.69%. We expect the impact of higher oil prices to be reflected in a 4% increase in airfares, and we expect a tariff impact of about 0.03pp worth this month.”
Morgan Stanley
– “We expect core CPI to rise 0.19% m/m (2.6% y/y), slightly down from February. We forecast core commodities in positive territory, but possibly closer to the 0% mark. We think tariff pass-through will continue in March, but we also expect soft cars inflation and a slowdown in apparel after February’s strong readings. Further strong rents and positive air fares due to seasonal payments. “Despite inflation, core services have declined.”
– “The headline comes in at 0.84%m/m (3.3% y/y, NSA index: 330.337) as higher oil boosts gasoline prices – this will be the highest reading since disruption to oil markets related to the Russia-Ukraine conflict in 2022.”
