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February CPI ?3

09:37 11-Mar-26


February CPI numbers are out in line with expectations at +0.3% for the headline and +0.2% for Core.  Shelter was the largest factor in the increase at +0.2%, but food rose at twice that rate.  American equity futures were already mildly negative before the report and this isn't helping.  A week ago, this service anticipated that the market would look past these numbers if they were benign because of war in the Middle East.  However, it has also repeatedly pointed out that inflation readings have rarely been compatible with the Fed's 2% target.  What's changed since noting that inconsistency with that goal at the beginning of last year is that incomes are no longer rising faster than inflation.  

Looking ahead, we still have PCE to come on Friday morning, but it seems likely that these figures will bring affordability further into focus, especially at next week's Fed meeting, where FedWatch now has less than a 1% chance for a cut.  I think Powell is likely to reiterate what this service has already stated: the war is inflationary and how long it lasts is the part that matters most.  That will contrast with administration messaging which is increasingly viewed as unreliable and self-serving.

In the meantime, real world impacts are beginning to filter through to corporate projections, with our parent CrowdWisers service documenting some of the more high profile instances.