Political | Process

The annual rate of US inflation, as per the Consumer Price Index (CPI), came in at 8.5% in March, slightly the median economist forecast for a reading of 8.4% and higher versus February’s YoY rate of 7.9%.

The MoM rate of inflation according to the CPI came in at 1.2% MoM, in line with the median economist forecast for a reading of 1.2% and above versus February’s 0.8% MoM reading. 

Core Consumer Price Inflation came in at 6.5% YoY and 0.3% MoM, both below expectations for 6.6% and 0.5% respectively.

Indeed, the MoM rate of Core CPI was lower versus February’s 0.5% reading, while the YoY rate in March was only up slightly versus February’s 6.4% reading. 

The initial reaction in the DXY was to plunge back towards the 100 level, likely due to the softer than expected Core CPI figures. The DXY is now back to trading flat on the day.  

Russia’s invasion of Ukraine has stoked last fall’s inflation surge by reducing Russian oil supplies and intensifying supply chain bottlenecks, especially for energy, wheat and other commodities shipped from the region.

Meanwhile, worker shortages in the U.S. are prompting companies to boost pay sharply to attract job candidates, leading them to lift prices to maintain profit margins.

Excluding volatile food and energy items, so-called core prices rose 6.5% annually in March, the largest advance since August 1982. On a monthly basis, core prices increased 0.3%

Both Wells Fargo and Barclays reckon inflation likely peaked in March. A fading pandemic should help ease supply snarls and labor shortages this year, economists have said.

But don’t celebrate quite yet. “The descent in inflation is going to be painfully slow,” says Wells Fargo economist Sam Bullard.