US: Significantly higher headline and core inflation – Nordea Markets

US core CPI rose 0.2% m/m in March in line with expectations as base effects pushed both core and headline inflation significantly higher and strong momentum points to even higher core inflation in coming months, explains Anders Svendsen, Research Analyst at Nordea Markets.

Key Quotes

“US core CPI came out at 0.2% m/m in March, unchanged from February and in line with consensus expectations. Consequently, core CPI inflation rose to 2.1% y/y from 1.8% y/y in February.”

“Headline CPI dropped 0.1% m/m in March, slightly below expectations. Still, headline inflation increased to 2.4%  y/y in March from 2.2% y/y in February.”

“The main drivers include significant rises in prices of apparel and transportation services, while energy price dropped significantly over the month.”

“Base effect from energy prices pushed headline inflation higher and base (“Verizon”) effects pushed core inflation significantly higher.”

“Momentum remains fairly high, pointing to additional increases in core CPI inflation in the coming months.”

“We expect core inflation to reach 2.5% during summer and rise very gradually during the remainder of the year.”