Core CPI Cools to 0.2% as Gasoline Surges 21.2%
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- Core CPI rose 0.2% MoM in March, below the 0.3% consensus, while the year-over-year core rate (ex-food and energy) climbed to 2.6% from 2.5% in February.
- Headline CPI jumped 0.9% MoM and 3.3% YoY — the highest annual print since April 2024 and the largest monthly gain since June 2022 — with gasoline (+21.2% MoM) accounting for roughly two-thirds of the rise.
- The energy index surged 10.9% MoM, its biggest monthly gain since September 2005, as fuel oil spiked 30.7% (largest since February 2000); the source notes energy CPI is still tracking WTI 'with room to rise further if oil remains disrupted.'
- Shelter inflation accelerated to a 0.3–0.4% MoM gain, the biggest monthly increase since January 2025, though rent posted its slowest annual increase since October 2021 at 2.56% YoY.
- Goldman Sachs estimates the Fed's preferred core PCE gauge rose 0.22% MoM in March, translating to 3.10% YoY, with headline PCE estimated at +0.60% MoM and 3.40% YoY.
- Rate-cut odds moved modestly higher after the print, with the source noting the market appears willing to 'look through' the energy-driven headline spike.
- Under the hood of core, apparel (+1%) and airfares (+3%) rose — the source flags apparel as 'possibly reflecting tariff passthrough' — while used cars (-0.4%), prescription drugs (-1.5%), and recreation services (-0.4%) declined.
Why it matters: Goldman's 0.22% MoM core PCE estimate means the Fed's preferred inflation gauge is tracking well below the headline spike, and rate-cut odds rose modestly after the print. But the source notes energy CPI is still tracking WTI with 'room to rise further if oil remains disrupted' — meaning the shock driven by the Iran war hasn't finished feeding through and the '70s analog remains a live risk.
