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US CPI MAR’25 PREVIEW

ADMIN || 6th April 2025

March Core CPI inflation likely rebounded to 0.28% m-o-m in March (our estimate against current consensus of .3%) from 0.23% in February. Headline CPI remained soft at 0.09% (our estimate against current consensus of .1%) due to significant fall in gasoline prices. Core goods forecast is at +0.25% m-o-m in March, up from 0.219% in February. We expect super core service inflation picked up modestly to 0.29% m-o-m in March from 0.22% in February, due to higher lodging-away-from-home prices and a slower decline in airfares. Rental inflation should be stable around 0.3% MoM. Our forecast for core PCE inflation is 0.14% m-o-m, down from 0.37% in February due to expected soft PPI data on account of sharp fall in portfolio management service prices as well as airline fare prices. But Fed is likely to ignore the soft data in line of the 2nd April reciprocal tariff event and the expected 1% increase in core PCE by end CY25. We continue to look at monthly NFP data for hints on the Fed rate cutting cycle to begin in earnest. Our core view remains that NFPs are going to decline materially going forward and Fed will prioritise it’s employment mandate over the price stability mandate sooner than later.

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