US CPI Preview: Monthly gains to moderate, annual rate set to jump - Wells Fargo

US CPI data will be released on Wednesday. Inflation is likely to moderate in March according to analysts at Well Fargo, with an overall gain of 0.1% and 0.2% for core inflation. 

Key Quotes: 

“CPI inflation has gotten off to a solid start this year. After a 0.5 percent increase in January—largely on the back of the biggest increase in core inflation in almost 12 years—there were few signs of payback in February. Both headline and core CPI rose 0.2 percent last month. The year-over-year rate of headline CPI rose to 2.2 percent, while the year-ago change in core CPI held steady at 1.8 percent.”

“For March, we expect monthly gains to moderate again. We forecast that headline CPI rose 0.1 percent amid an unusually small gain in energy prices for this time of year. We expect that core CPI will come in at a “low” 0.2 percent (0.15 percent), while the non-seasonally adjusted index should rise to 249.35.”

“The most eye-catching part of the March report is likely to be the leap in year-over-year inflation. March was the low point of last year’s inflation slowdown. Core CPI posted a rare drop (down 0.07 percent) on the back of the now-infamous decline in wireless services. That makes for an easy base comparison in March. We expect core CPI to jump to 2.1 percent on a yearago basis and for headline inflation to rise to 2.5 percent.”

“A year after the now-infamous drop in wireless costs, core CPI should vault back above 2 percent yr/yr.”