Inflation Data Will Be Released Tuesday Morning. The Following Is What To Expect

(CTN News) – Gas prices likely kept inflation at bay in February, reinforcing the Federal Reserve’s move to reduce interest rates slowly.

As per Dow Jones consensus, prices across a broad spectrum of goods and services are expected to rise 0.4% on the month, just above January’s 0.3% increase. If food and energy are excluded, core inflation will increase by 0.3%, one-tenth of a percentage point above last month.

Inflation is expected to increase 3.1% year-over-year for headline prices, and 3.7% for core prices, according to the Labor Department’s Bureau of Labor Statistics Tuesday at 8:30 a.m. Eastern Time. There was a 3.1% and a 3.9% year-on-year growth in January, respectively.

Inflation is almost certain not to be cut at the Fed’s meeting on April 30-May 1 and possibly into the summer, despite its sharp fall since the peak in mid-2022. The CPI data came in higher than expected in January, and Fed officials were forced to change their rhetoric about easing policy afterward.

“The Fed will likely need more confidence that will return to target on a sustained basis over the next few months, according to Sarah House, senior economist at Wells Fargo.

Headline readings were lower earlier in the winter due to lower energy prices.

However, Wells Fargo estimates that energy services rebounded by 4% in February, leading to a rise in gas prices, where a gallon of regular gas is up about 20 cents, or more than 6%, from a month ago.

The bank also estimates that goods prices have held steady despite easing supply chain pressures and high interest rates. Inflation was kept in check by lower prices for travel, medical care, and other services, House said.

In spite of this, Wells Fargo raised its full-year inflation forecast.

Core CPI is now expected to rise by 3.3% this year, up from 2.8% previously. Wells Fargo sees inflation at 2.5% for the year, up from aearlier estimate of 2.2% based on the core personal consumption expenditures price index. This isn’t the only bank expecting higher inflation rates.

In its February survey of consumers, the New York Fed found that while consumers remained optimistic about inflation at 3% for the next year, their expectations for three and five years increased to 2.7% and 2.9%, respectively, well above the central bank’s 2% target.

The outlook for gas prices came in relatively benign, despite the fact that gas prices can have an outsized impact on monthly fluctuations. The Atlanta Fed measured “sticky price” inflation in January at 4.6%. Since housing and insurance prices influence the gauge, officials hope that shelter costs will decrease through the year.

On Thursday, the BLS will release its February producer price index, which measures what producers receive as wholesale prices. Inflation data will be the last the Federal Open Market Committee sees before its next meeting on March 19-20.

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