ChainThink reports that on March 11, the U.S. Department of Labor reported that the Consumer Price Index rose 2.4% year-over-year in February, matching January’s reading and aligning with economists’ expectations. Core prices, excluding volatile food and energy items, increased 2.5% year-over-year, also in line with forecasts.
However, since the outbreak of the conflict in Iran, U.S. benchmark crude oil futures have experienced significant volatility, with an average trading price of about $82 per barrel this month, compared to approximately $65 per barrel in February. As a result, March's inflation data may be even hotter.
RSM Chief Economist Joseph Brusuelas estimates that, based on a rule of thumb, every $10 increase per barrel in oil prices raises the Department of Labor’s inflation reading by approximately 0.2 percentage points. Although details vary slightly among economists, most agree that oil prices will push up inflation in March. Economists also believe that the current year-over-year inflation reading has been artificially suppressed due to missing housing cost data from October, caused by last year’s government shutdown. However, this downward bias is expected to disappear in the April inflation report, at which point the measured inflation rate will rebound. (Cnfol)