Source: Economics Group of Wells Fargo Bank, N.A.
Summary
The March CPI data will feel dated following President Trump’s announcement of significantly larger tariffs across trading partners, but should shed some light on how the changing trade environment was already beginning to affect pricing. We estimate headline CPI was unchanged in March, leading the year-ago rate to sink to a six-month low of 2.5%. The details are likely to prove less encouraging than the headline as the drag from energy goods was fanned by growth concerns, core goods inflation was already on the upswing and services disinflation remains frustratingly slow. We estimate the core CPI advanced 0.2% again last month, bringing the year-over-year rate to nearly a four-year low of 3.0%. March now looks set to mark the nadir in core inflation this year, however, as the administration’s efforts to reorient U.S. trade led to faster price growth.
That Was Then
We estimate consumer prices were unchanged in March, leading the year-ago rate down to a six-month low of 2.5%. That said, the report is unlikely to be as benign as first meets the eye. Overall prices are expected to remain steady thanks to the largest monthly drop in energy good prices in over two years, which was fueled by growth concerns and favorable seasonal adjustment factors (Figure 1).