US CPI report arising tomorrow, what to anticipate?

This is what the estimates are looking for ahead of the March report tomorrow:

• CPI +0.9% m/m (prior +0.3%)
• CPI +3.3% y/y (prior +2.4%)
• Core CPI +0.3% m/m (prior +0.2%)
• Core CPI +2.7% y/y (prior +2.5%)

Even though it will be a case of energy prices boosting headline inflation, core prices are also expected to see some spillover impact. And the main issue is that the longer the US-Iran conflict drags on, the deeper and more scarring it will be on consumer behaviour and business pricing in general.

There is also some assumption that the acceleration in prices will be even more profound in April. However, let’s leave that for a separate discourse.

In looking to the inflation data tomorrow, here are what some key analysts are noting:

BofA
– “CPI inflation likely jumped due to energy in March. The March CPI report should show the initial effects of the Iran war. We forecast a 0.9% m/m (0.91% unrounded) increase in headline CPI owing to a 10.6% m/m jump in energy prices. Core CPI, meanwhile, should be softer at 0.3% m/m (0.26% unrounded). The headline NSA index should print at 330.762. Market and our attention would be focused on the implications for PCE inflation after very strong core PCE prints in recent months.”
– “Core CPI details. While our forecast for core CPI is cooler than headline CPI, it still implies a 3.1% annualized rate, above levels typically consistent with 2% core PCE. In terms of the details, we expect a 1% m/m pop in used cars to contribute to a 0.23% m/m increase for core goods. Core services likely rose by 0.28% m/m. Shelter should remain relatively sanguine due to cooler rent inflation. However, non-housing services’ inflation, likely picked up slightly on the month.”

Goldman Sachs
– “We expect a sharp increase in energy prices to contribute to a 0.87% rise in the headline CPI in March. Our forecast implies a large increase in year-over-year headline CPI inflation from 2.43% to 3.28%. Energy prices are likely to rise sharply again in April, taking headline CPI inflation to around 4%.”
– “We forecast a 0.28% increase in the core CPI, which would raise the year-over-year rate to 2.69%. We expect the impact of higher oil prices to show up in a 4% increase in airfares, and we expect roughly 0.03pp worth of tariff effects this month.”

Morgan Stanley
– “We expect core CPI to rise 0.19% m/m (2.6% y/y), slightly below February. We forecast core goods in positive territory, but likely close to the 0% mark. We think the tariff pass-through continued in March, but we also anticipate soft cars inflation and deceleration in apparel after February’s strong reading. Core services decelerate due to seasonal payback and despite stronger rents and positive airfares inflation.”
– “Headline comes at 0.84%m/m (3.3% y/y, NSA Index: 330.337) as higher oil boosts gasoline – this would be the highest reading since the disruption in oil markets related to the Russia-Ukraine conflict in 2022.”