The full impact of the sudden surge in US gasoline prices, which consumers have felt, is expected to be reflected in the key inflation data due next week.
Economists expect the consumer price index to accelerate by 1% in March, representing the largest monthly rise since 2022, after the Iran war pushed gasoline prices at gas stations up by about one dollar per gallon.
Meanwhile, the core consumer price index, which excludes energy and food, is expected to rise 0.3% from the previous month, according to a Bloomberg survey ahead of the Bureau of Labor Statistics report due on Friday.
A day before the release of the Consumer Price Index, the Federal Reserve's preferred inflation gauge will offer a snapshot of pre-war price pressures. Economists believe that the core personal consumption expenditures price index, which excludes food and energy, rose 0.4% for the third consecutive month in February, suggesting that progress toward more moderate inflation was already faltering even before the conflict began.
Amid a stable U.S. labor market, entrenched price pressures—along with new inflationary risks stemming from the Iran war—highlight the difficulties the Federal Reserve faces in cutting interest rates this year.
Bloomberg Economics experts' opinion:
The exceptionally strong jobs report expected for March and the low unemployment rate certainly do not strengthen the case for the Federal Reserve to resume cutting interest rates anytime soon. Data due this week is also unlikely to support a rate cut.
Anna Wong, Stuart Ball, Eliza Winger, Chris G. Collins, Alex Tanzi and Troy Dory
The release of the minutes from the central bank’s March monetary policy meeting, expected mid-week, may shed light on officials’ concerns about inflation or the potential economic fallout from the conflict with Iran and related disruptions to energy and other commodity flows.
In addition to personal consumption expenditures price data, the Bureau of Economic Analysis report will include figures on personal spending as well as income. Economists expect a modest increase in inflation-adjusted spending.
Other reports expected next week include the Institute for Supply Management's services activity index for March, due on Monday. On Friday, the University of Michigan will release its preliminary reading of the consumer confidence index for April.
