- Inflation data misses expectations - Slowdown led by services - Pres. Trump claims credit for price decline - Bond markets look past Wednesday’s report
Decelerating US inflation data did little to alter investors' moods on Wednesday despite surprising most forecasters by undercutting estimates. However, the White House was happy to take credit for the moderation in consumer prices.
The US Bureau of Labor Statistics (BLS) reported that the headline annual inflation rate rose 2.8%, missing the 2.9% forecast and two-tenths below last month’s figure. Core CPI, which excludes food and energy, increased by 3.1% y/y, undercutting both the estimate and the previous month’s reading by the same margin. On a monthly basis, CPI rose 0.2% for both the headline and core measures, missing the forecast of 0.3% for both.
The so-called super core, which excludes all goods prices, food, energy and housing costs, increased by an unrounded 0.215%. Statisticians said services largely drove the slowdown from January, as airfares and owners’ equivalent rent (OER) softened. Food costs also moderated, with the food index rising 0.2% month-on-month and 2.6% y/y.
Within the food category, eggs have remained a focal point among analysts, continuing to see gains. The main contributor was a 10.4% increase in egg prices within the meats, poultry, fish and eggs sub-sector. On services, the BLS said shelter costs rose 0.3% in February, accounting for nearly half of the monthly increase in all items. This was only partially offset by a 4% fall in airline fares and a 1.0% decline in petrol prices. In February, owners’ equivalent rent rose 0.3% (0.28% unrounded).
Market and Political Reactions
Michael Gapen of Morgan Stanley noted that housing inflation fell below expectations due to a downward surprise in OER. “Rent of primary residence decelerated as expected. We anticipate further disinflation as market rents, an indicator that leads CPI rents by three quarters, continue to show weak prints.”
White House Press Secretary Karoline Leavitt was quick to seize on the data. “Today’s CPI report shows inflation is declining and the economy is moving in the right direction under President Trump. Core consumer prices, the best measure of inflation, dropped to their lowest level in four years. This inflation report, much like last week’s jobs report, is far better than the media predicted and the so-called ‘experts’ expected. When will they learn to stop doubting President Trump?” A truly remarkable feat for an administration in office for barely two months.
Ian Lyngen of BMO Capital Markets remarked that the most interesting aspect of the report was not the data itself, which was bond-friendly, but rather the market’s muted reaction. “While there was an initial kneejerk bid to the headlines, buying interest quickly faded as investors refocused on the potential reflationary implications of the trade war.”
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- Inflation data misses expectations
- Slowdown led by services
- Pres. Trump claims credit for price decline
- Bond markets look past Wednesday’s report
By Harry Daniels
LiveSquawk News
@HarryDaniels71
12 March 2025 | 20:00 GMT
Decelerating US inflation data did little to alter investors' moods on Wednesday despite surprising most forecasters by undercutting estimates. However, the White House was happy to take credit for the moderation in consumer prices.
The US Bureau of Labor Statistics (BLS) reported that the headline annual inflation rate rose 2.8%, missing the 2.9% forecast and two-tenths below last month’s figure. Core CPI, which excludes food and energy, increased by 3.1% y/y, undercutting both the estimate and the previous month’s reading by the same margin. On a monthly basis, CPI rose 0.2% for both the headline and core measures, missing the forecast of 0.3% for both.
The so-called super core, which excludes all goods prices, food, energy and housing costs, increased by an unrounded 0.215%. Statisticians said services largely drove the slowdown from January, as airfares and owners’ equivalent rent (OER) softened. Food costs also moderated, with the food index rising 0.2% month-on-month and 2.6% y/y.
Within the food category, eggs have remained a focal point among analysts, continuing to see gains. The main contributor was a 10.4% increase in egg prices within the meats, poultry, fish and eggs sub-sector. On services, the BLS said shelter costs rose 0.3% in February, accounting for nearly half of the monthly increase in all items. This was only partially offset by a 4% fall in airline fares and a 1.0% decline in petrol prices. In February, owners’ equivalent rent rose 0.3% (0.28% unrounded).
Michael Gapen of Morgan Stanley noted that housing inflation fell below expectations due to a downward surprise in OER. “Rent of primary residence decelerated as expected. We anticipate further disinflation as market rents, an indicator that leads CPI rents by three quarters, continue to show weak prints.”
White House Press Secretary Karoline Leavitt was quick to seize on the data. “Today’s CPI report shows inflation is declining and the economy is moving in the right direction under President Trump. Core consumer prices, the best measure of inflation, dropped to their lowest level in four years. This inflation report, much like last week’s jobs report, is far better than the media predicted and the so-called ‘experts’ expected. When will they learn to stop doubting President Trump?” A truly remarkable feat for an administration in office for barely two months.
Ian Lyngen of BMO Capital Markets remarked that the most interesting aspect of the report was not the data itself, which was bond-friendly, but rather the market’s muted reaction. “While there was an initial kneejerk bid to the headlines, buying interest quickly faded as investors refocused on the potential reflationary implications of the trade war.”