MNI US CPI Preview: Calm Before The Tariff Storm

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EXECUTIVE SUMMARY:

• Analyst unrounded estimates see core CPI inflation easing to a still solid 0.28% M/M in February after a far stronger than expected 0.45% M/M in January.
• January’s beat came from a variety of factors and broad expectations are that much of these will reverse.
• Headline CPI is expected to show a very similar M/M pace as core, with food inflation a little stronger but energy prices flat on the month (lower gasoline vs higher natural gas).  
• Core CPI should round down to 3.2% Y/Y from 3.26%, whilst headline should ease a full tenth to 2.9% Y/Y.
• Early estimates see core PCE inflation at 0.24% M/M for mild moderation from the 0.28% in January, i.e. closing much of the wedge seen between core CPI and PCE last month.
• The initial PCE implications plus the readthrough from details within Thursday’s PPI report will ultimately set the tone of the two releases.
• This report won't influence March's FOMC decision, but with only one more report before the May decision, the main risk given current market pricing is that the data could largely cement a "hold" until at least June.