US CPI disappoints at core and headline level - ING

Rob Carnell, Chief International Economist at ING, suggests that weaker than expected US inflation figures make it even more likely that the April FOMC is a non-event.

Key Quotes

“Even with rising retail gasoline prices pushing up the energy component of CPI by 0.9% mom, softness across many of the other components of this release led to a muted 0.1% mom increase, and core CPI was equally soft at 0.1% mom too. Headline March inflation has fallen back to 0.9% YoY, and core inflation has drifted back to 2.2% from 2.3% YoY.

Many of the subcomponents of the CPI release were down on the previous month, most notably food and beverages (-0.2% mom from +0.2% in February) and apparel (-1.1% from +1.6%). About the only upside result was tobacco, which rose 0.5% from 0.2%.

This inflation result follows some weaker activity data in recent weeks (for example retail sales), and will make it very difficult for the hawks on the Federal Reserve to make a persuasive case for a rate hike at the April 27th rate setting meeting. Even flagging a possible June hike in the April meeting now seems like a stretch.”