Cleveland Fed CPI nowcast indicates 0.84% m/m increase in March, based on weekly gasoline and daily oil prices.
Figure 1: Headline CPI (blue, left log scale), quarter-on-quarter annualized inflation, % (red, right scale). Source: BLS, Cleveland Fed accessed 3/31, and author’s calculations.
The nowcast for headline PCE m/m inflation is 0.61% (vs. 0.84% for headline CPI)
It’s no wonder what’s driving the nowcast.
On weekly data, the year-on-year growth rate of gasoline prices is 26.2%, while that for diesel is 50.4%.
Off topic – Before this year’s first bombings, there were press reports that the war-criminal-in-chief had in mind a two-part war against Iran. The first part was to destroy air defenses and whatever else we could manage, then re-arm and destroy more in a second round. Since then, the war criminal will have learned that re-arming is a years-long process, with the U.S. weakened in the meantime. It would be a good thing if he takes that new knowledge to heart, but as his mental deterioration progresses, there’s no telling how much information he can retain. Another round of war is entirely possible, maybe starting the day after the mid-term vote.
Iran has no reason to trust any deal made with the felon – no one has – and in the same vein, Iran has no reason to trust that any unilateral end to U.S. violence against Iran is permanent. They read the headlines, too, and know he has considered a two-stage war.
Israel, meanwhile, is fighting like hell to kick not just Hezbollah, but all Shi’ites,, out of Lebanon; ethnic cleansing in its purest form. That is an assault both on Iran’s interests and on Iran’s ethnic brethren. So whatever the war criminal tell us in today’s episode of The Apprentice, from Iran’s perspective, the war continues. That continuing war will be the context for Iran’s treatment of shipping through the Strait of Hormuz.
That PCE estimate annualized to 3.5%, me thinks? CPI to 6.3%?
Monthly wobbles and looking past the energy price shock and all that, sure, but numbers like that won’t lower the funds rate outlook.
Futures are now pricing in a strong likelihood of no change in rates by year end. A month ago, the modal estimate was for a 50 basis point reduction in the rate by year end.
diesel will filter through the economy. everything is delivered via diesel trucks. it will create longer than transitory inflation, because the spike in gas prices will drive some truckers out of business. by supply and demand, it will take a while to recover those drivers, so costs will remain elevated.
bloomberg radio had a grocer on the other day. he sees prices remaining elevated, although his take is that it will not result in an inflation feedback loop. yet.
OK, the war-criminal-in-chief has repeated today that he may comeback for a second round of war with Iran.