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04/11/2024 |

CPI Comes In Hot: Understanding The March Inflation Surge

This is a chart of the most recent CPI reading.

March’s Inflation Figures

In March, CPI inflation rates rose once again, above expectations of 3.4%

  • CPI YoY: 3.5% vs. 3.4% est. (3.2% prior)
  • Core CPI YoY: 3.8% vs. 3.7% est. (3.8% prior)

Factors Driving The Surge

Various factors contribute to this inflationary surge. Supply chain disruptions, triggered by the pandemic, have eased, leading to decreased prices for goods like used cars, furniture, and appliances. However, services such as rent, car insurance, and transportation continue to escalate. Gasoline prices, in particular, rose by 1.7% in March, attributed to factors including the Russia-Ukraine conflict disrupting oil supplies and increasing demand with the onset of the spring driving season.

Implications Of CPI

On the news, major stock indexes and Gold fell while the dollar and Treasury yields jumped, with the 10-year trading at 4.47%. Additionally, oil prices rose, with Brent crude approaching $90/barrel.

Additionally, the market is no longer pricing in a rate cut in July. The market now thinks the Fed will start cutting rates in September and will only do two 0.25% rate cuts this year, per the CME FedWatch Tool.