Core CPI Prints Cooler Than Expected Despite Biggest Jump In Energy Prices Since 2005

While PCE showed some signs of higher energy prices leaking into inflation prints, it was still February data. As we previewed, today's CPI data is for March and will bear the full brunt of the Iran War's impact on energy costs after Core CPI fell to its lowest in four years in February.

The headline CPI soared 0.9% MoM (as expected) and while it was a big MoM jump, Consumer Prices rose 3.3% YoY (up from +2.4% YoY in February), but below the 3.4% YoY exp...

Source: Bloomberg

This is the highest headline CPI YoY since April 2024 and biggest MoM jump since June 2022.

Obviously, Energy dominated the rise in headline CPI...

That was Gasoline's biggest rise on record since 1967 - accounting for two-thirds of the rise in headline CPI...

Core CPI (excluding Energy and Food prices) printed cooler than expected (+0.2% MoM vs +0.3% MoM exp) with the Core YoY rising only modestly from February...

Source: Bloomberg

Core Services costs slowed modestly...

Source: Bloomberg

SuperCore CPI (Services ex-Shelter) lifted very modestly on a YoY basis with Transportation Services the biggest driver...

Source: Bloomberg

Nothing too surprising here for policymakers to fret over, and rate-cut odds are modestly higher since the print.

The market seems willing right now to look through the spike - let's just hope the '70s analog is not about to play out.