December 24, 2024

A gas station displays the price of gasoline on March 12, 2024 in Chicago, Illinois.

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A closely watched Labor Department report on Wednesday is expected to show little progress has been made in the fight to lower inflation.

If so, it would be bad news for consumers, market participants and Fed officials, who are hoping prices rise slowly enough to begin gradually cutting interest rates later this year.

The Consumer Price Index, which measures the cost of a variety of goods and services in the $27.4 trillion U.S. economy, is expected to rise 0.3% across all items, as well as the core measure excluding volatile food and energy.

Calculated on a 12-month basis, the inflation rates will be 3.4% and 3.7% respectively. The overall interest rate increased by 0.2 percentage points from February, and the core interest rate only decreased by 0.1 percentage points. There is still a far cry from the two. away from the central bank’s 2% target.

“We’re not moving fast enough or convincingly enough, and I think that’s what this report will show,” said Dan North, senior economist at Allianz Trading North America.

The report will be released at 8:30 a.m. ET.

Progress made, but not enough

What to see

There will be several key areas to watch in Wednesday’s report.

In addition to overall data, trends in items such as housing, air tickets and car prices are also important. These areas have been leading the current economic cycle, and moves in either direction could signal longer-term trends.

Economists at Goldman Sachs expect across-the-board declines in air travel-related items, as well as vehicle sticker prices, and expect a smaller increase in housing costs, which account for about a third of the weight in the Consumer Price Index (CPI). However, a survey released by the New York Federal Reserve Bank on Monday showed a sharp rise in expectations for rental costs next year, which is bad news for policymakers who often point to falling housing costs as a cornerstone of their easing inflation arguments. .

Likewise, a National Federation of Independent Business March survey released Tuesday showed small businesses are confident about their growth. At its lowest level in 11 years, homeowners cited inflation as their top concern.

“Inflation is cumulative, which is why prices remain high,” North said. “People still can’t believe how high the prices are.”

Natural gas prices are also likely to play an important role in the CPI release, following a 3.8% rise in February. While the gasoline index has been relatively unchanged over the past two years, it is still up more than 70% from April 2020, when the brief COVID-19 recession ended. Food prices increased by about 23% during the same period.

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