US Inflation Gauges Likely Diverged Before War in Iran

Economic Indicators and Inflation - The PCE price figures for January are part of the government's income and spending report, with economists forecasting little change in inflation-adjusted consumer spending for the month [1] - The core PCE deflator is expected to show a 0.4% increase in January, with a median forecast of a 3% increase compared to the same month last year, indicating persistent inflation [5] - The consumer price index report for February is projected to show a core inflation measure rising just 0.2%, suggesting some easing in price pressures before the Iran conflict introduced new uncertainties [6] Labor Market and Consumer Sentiment - Following a dismal payrolls print in February, the upcoming CPI report will be a key factor for market expectations regarding the Fed funds rate [2] - January job openings figures will illustrate the demand for labor, while the University of Michigan's preliminary March survey will provide insights into consumer perceptions regarding the Iran conflict's impact on their finances [8] Global Economic Context - The ongoing military operations in the Middle East have led to soaring oil prices, which are expected to contribute to higher overall inflation in March [3][4] - Policymakers in Asia are facing a fresh geopolitical shock, with the potential for an energy price surge impacting growth and complicating inflation dynamics [10] Regional Economic Developments - In the euro zone, reports for January will provide insights into manufacturing performance, particularly in Germany, where industrial production and factory orders will be closely monitored [15] - In Latin America, inflation reports from major economies are anticipated, with Turkey's central bank expected to maintain its rate at 37% amid rising inflation risks due to the Middle East conflict [21]