A key inflation reading is due out Tuesday morning. Here’s what to expect

Rising
gasoline
prices
likely
put
a
floor
under

inflation
in
February,
potentially
reinforcing
the

Federal
Reserve’s
decision
to
take
a
go-slow
approach
with
interest
rate
reductions.

Economists
expect
that
prices
across
a
broad
spectrum
of
goods
and
services
rose
0.4%
on
the
month,
just
ahead
of
the
January
pace
for
0.3%,
according
to
the
Dow
Jones
consensus.
Excluding
food
and
energy,
the
increase
for
core
inflation
is
forecast
at
a
0.3%
gain,
also
one-tenth
of
a
percentage
point
above
the
previous
month.

On
a
year-over-year
basis,
headline
inflation
is
expected
to
show
a
3.1%
gain
and
core
inflation
a
3.7%
increase
when
the
Labor
Department’s
Bureau
of
Labor
Statistics
releases
its
latest
reading
on
the
consumer
price
index
Tuesday
at
8:30
a.m.
ET.
The
respective
12-month
readings
in
January
were
3.1%
and
3.9%.

Though
it
has
fallen
sharply
since
its
peak
in
mid-2022,
inflation’s
resilience
almost
certainly
will
assure
no
Fed
rate
cuts
at
its
next
meeting
March
19-20,
and
possibly
into
the
summer,
according
to
current
market
pricing.
Markets
were
rattled
in
January
when
the

CPI
data
came
in
higher
than
expected,
and
Fed
officials

shifted
their
rhetoric
afterward
to
a
more
cautious
tone
about
easing
policy.

“While
we
do
not
expect
the
trend
in
inflation
to
re-accelerate
this
year,
less
clear
progress
over
the
next
few
months
is
likely
to
keep
the
Fed
searching
for
more
confidence
that
inflation
is
on
course
to
return
to
target
on
a
sustained
basis,”
Sarah
House,
senior
economist
at
Wells
Fargo,
said
in
a
recent
client
note.

Energy
prices
had
eased
earlier
in
the
winter,
putting
some
downward
pressure
on
headline
readings.

But
Wells
Fargo
estimates
that
energy
services
rebounded
4%
in
February,
leading
to
an
increase
at
the
pump,
where
a
gallon
of
regular
gas
is
up
about
20
cents,
or
more
than
6%,
from
a
month
ago,

according
to
AAA.

The
bank
also
estimates
that
goods
prices
have
held
their
ground
despite
an
easing
in
supply
chain
pressures
and
pressure
from
higher
interest
rates.
On
the
brighter
side,
the
House
said
lower
prices
on
travel,
medical
care
and
other
services
helped
keep
inflation
in
check.

Still,
Wells
Fargo
has
raised
its
full-year
inflation
forecast.

The
bank’s
economists
now
expect
core
CPI
to
run
at
a
3.3%
rate
this
year,
up
from
the
previous
2.8%
estimate.
Focusing
on
the
core
personal
consumption
expenditures
price
index,
the
preferred
Fed
gauge,
Wells
Fargo
sees
inflation
at
2.5%
for
the
year,
versus
a
prior
estimate
of
2.2%.

Wells
Fargo
isn’t
alone
in
expecting
a
higher
pace
of
inflation.

In
its
February
survey
of
consumers,

the
New
York
Fed
found
that
while
respondents
held
to
their
one-year
outlook
for
inflation
at
3%,
their
expectations
at
the
three-
and
five-year
horizons
accelerated
to
2.7%
and
2.9%
respectively,
both
well
ahead
of
the
central
bank’s
2%
target.

While
increases
in
gas
prices
can
play
an
outsize
role
in
monthly
fluctuations
for
the
survey,
the
outlook
for
gas
price
increases
was
actually
relatively
benign.

An
Atlanta
Fed
measure
of

“sticky
price”
inflation
held
at
4.6%
on
a
12-month
basis
in
January.
The
gauge
is
weighted
toward
items
such
as
housing
and
insurance,
and
Fed
officials
are
hoping
that
shelter
costs
decrease
through
the
year,
taking
some
pressure
off
the
cost
of
living
gauges.

On
Thursday,
the
BLS
will
release
the
February
producer
price
index,
which
measures
what
producers
get
for
their
goods
and
services
at
the
wholesale
level.
The
two
indexes
will
be
the
last
inflation
data
the
rate-setting
Federal
Open
Market
Committee
will
see
before
it
meets
next
week.