March US CPI review: the disinflationary cycle continues, but will the Fed erroneously focus on core inflation?
March US CPI review: the disinflationary cycle continues, but will the Fed erroneously focus on core inflation?
While headline CPI growth continues to decelerate, the exclusion of food & energy prices meant that core CPI growth rose. It would be a mistake to focus on core, as opposed to headline inflation data.
Executive summary
US CPI growth fell from a YoY growth rate of 6.0%, to 5.0% in March.
Core US CPI growth rose from a YoY growth rate of 5.5%, to 5.6% in March.
Both measures were slightly below my estimates for CPI growth of 5.2% (5.2% consensus), and core CPI growth of 5.7% (5.6% consensus).
As expected, CPI used car & truck prices rose in March but by less than anticipated.
As expected, a large double-digit YoY decline in the CPI’s energy commodities component drove the bulk of the large moderation in headline CPI growth.
Having expected a further moderation in CPI food at home prices, the moderation stepped up a gear in March, with a MoM decline recorded.
While I had expected a further moderation in the CPI’s lagging rent based components, both owners' equivalent rent (OER) and rent of primary residence (RPR) recorded a particularly large MoM moderation in March.
The combination of sharply moderating/declining food and energy prices means that the second phase of the disinflation cycle pi…