Some good news on inflation? Fed might get it with the CPI.

By Jeffry Bartash

Price pressures may have eased somewhat in March

A roaring job market and high inflation readings earlier this year have cast doubt on whether the Federal Reserve will cut interest rates soon, but the March consumer prices report due out Wednesday could offer a glimmer of hope. .

The consumer price index is expected to rise 0.3% in March, according to economists surveyed by The Wall Street Journal.

This reading is not at all great news: the Federal Reserve would prefer monthly increases of 0.1% to 0.2%. However, it would show some progress after a 0.4% increase in February, the largest in five months.

The 12-month CPI increase would likely rise from 3.2% to 3.5%.

Economists predict that the core CPI will rise 0.3% in March after consecutive 0.4% gains in January and February.

But it's very close: many forecasters predict a gain of less than 0.2%.

The Fed considers the core rate to be a better predictor of future inflation because it excludes food and gas, categories that can be prone to large swings in the short term.

The base rate increase in the 12 months ended in March is expected to slow from 3.8% to 3.7%, still far from the Federal Reserve's 2% inflation target.

Wall Street will also be watching to see if the cost of housing - the biggest driver of inflation - begins to decline.

Prices of services are another signal about future inflation. They increased sharply in the first two months of the year, but are expected to stabilize in March.

A more benign March CPI, if it materializes, could keep the Federal Reserve on track to cut US interest rates as early as June.

Also available in the next week are minutes from the Federal Reserve's March interest rate meeting and Thursday's March producer price report.

The minutes will give investors a better idea of ​​how the Federal Reserve contemplated rate cuts in its latest decision, although the meeting has been somewhat overtaken by events.

The producer price index is an indicator of wholesale inflation. Prices tend to rise at the wholesale level before reaching consumers.

Wholesale prices decreased sharply towards the end of 2023 before rising again in early 2024.

Forecasters are also expecting a 0.3% reading on the PPI in March.

-Jeffry Bartash

This content was created by MarketWatch, operated by Dow Jones & Co. MarketWatch is published independently of Dow Jones Newswires and The Wall Street Journal.

 

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04-06-24 0701ET

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