What To Expect From Wednesday’s Inflation Report | Global News Avenue

Inflation may drop slightly in February, but if the forecast for Wednesday’s report is correct, it is above the Fed’s 2% annual rate of age.

The cost of living rose 2.9% in the 12 months to February, according to the Bureau of Labor Statistics’ monthly report Wednesday, measured by the Consumer Price Index. Dow Jones News and Wall Street Journal. This will increase by 3% from January’s annual average.

Wednesday’s inflation report could be an impact on interest rate outlook, as it will be the last major price report for the Federal Reserve officials will see at a policy meeting from March 18 to 19. The Federal Reserve has Holding Fed funds at a higher rate than usual Dissuading borrowing and calming inflation. But uncertainty about President Donald Trump’s tariffs have risen Worries about recessioncomplicate the appearance.

“For the Fed to prepare for its monetary policy meeting, especially in light of recent inflationary pressures on commodities and increased policy uncertainty related to tariffs,” Satyam Panday, chief economist at S&P Global, said in a comment: “

Consumers may feel the biggest bite of inflation at grocery checkout in February, a wholesale price measured by the producer price index.

“Given the sharp rise in prices for many food prices in PPI in January, we are likely to see food ingredients rise at least 0.6% in February in other measures during the early stage of production,” Dean Baker, senior economist at the Center for Economic and Policy Research, wrote in a comment.

This will be the biggest monthly gain since October 2022, a surge in inflation after the pandemic.

The inflation outlook is tariffs

But Fed economists and officials will keep a close eye on “core” inflation, which does not include volatile prices for food and energy.

Goldman Sachs forecasters expect core inflation to rise by 3.2% over the year, down from 3.3% in January. The continued decline in rents is helping to push core inflation towards the Fed’s 2% age target. CEPR said this should continue in the coming months.

But the ghost of tariffs is vaguely visible on the inflation outlook. President Donald Trump said he will impose comprehensive tariffs on Canada, Mexico and other countries on April 2. The trajectory of inflation can depend on the ultimate height of these tariffs and how many products and countries are affected.

Goldman Sachs’ forecasts now expect inflation to increase over the year, while they expect inflation to gradually decline in the absence of tariffs.