The 0.45% m/m increase in core CPI in January will, after the spike at this time last year, add to the impression that the price data have a residual seasonality problem. Assuming the producer price data come in a little hot tomorrow too, we estimate that core PCE prices increased by 0.39% m/m last month, which would only be slightly smaller than the 0.50% increase a year earlier, leaving the annual core PCE inflation rate at a still-elevated 2.7%. That lends support to our view that, with President Trump threatening to impose wide-ranging inflationary tariffs, the Fed won’t resume cutting interest rates this year.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services