Preview: Due March 12 - U.S. February CPI - Not as firm as January, but upside risks persist
We expect February’s CPI to increase by 0.3% both overall and ex food and energy, with the gains before rounding being 0.29% overall and 0.32% ex food and energy. The gains will be less strong than in January but a tendency for early year data to be strong is likely to persist. Tariffs on China will be a modest upside risk in February. Tariffs on Canada and Mexico pose larger upside risks in the months ahead.
Each month of Q1 2024 saw the core CPI increase by 0.4%, though all were a little less than 0.4% before rounding. We expect that after January’s core CPI came in above 0.4% before rounding, February’s will be rounded down to 0.3%. However, this will still leave quite a firm picture over the two months and March data is likely to come in strong due to tariffs on Canada and Mexico, as well as an increase on China.
We expect some of the components that were notably above trend in January, such as used autos, auto services, recreation services, hotels and air fares will see some moderation in February, but in most cases the New Year price hikes will not be reversed. Apparel is an upside risk after a 1.4% January decline.
Food prices are likely to remain firm, inflated by eggs, but gasoline prices are likely to see a small seasonally adjusted decline, though unadjusted gasoline prices were slightly higher. Yr/yr growth is likely to slip, overall, to 2.9% from 3.0%, with the core at 3.2% from 3.3%, but these will only reverse an increase seen in January.
