CIBC on Latest US CPI Report - FJElite

Price pressures surged in the US in March, as the impact of the war caused gasoline prices to spike. The 0.9% m/m gain in headline prices was in line with expectations, with a 21% jump in prices at the pump driving almost three-quarters of that advance, which saw the annual rate surge to 3.3%. There was little evidence of the oil shock passing through to other components, as core prices (ex. food/energy) increased by a tame 0.2% m/m, as we expected, leaving the annual rate at 2.6%. Next month's report will likely show greater pass through to core components, but looking beyond the war-induced volatility, tariff impacts appear to be boosting some categories still, with apparel prices rising strongly again, while shelter prices ticked up on the month on the owners' equivalent rent component. Overall, the Fed is set to remain on hold as it assesses the shock to inflation against a slowing underlying economy. We continue to see the Fed cutting rates later in the year, assuming the oil price shock is behind us.