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March Inflation Data - Full Breakdown

March Inflation Data - Full Breakdown

April 13, 2022

Every month, the Bureau of Labor Statistics releases the core CPI (consumer price index) numbers on a month over month and year over year basis. The CPI gives us insight into inflation or deflation, what sectors of the economy are inflating the most or which ones are stabilizing well. The March numbers hit the tape yesterday, and all eyes were glued to the print to gain insight into if inflation is calming, flat lining, or increasing as we move into the second quarter of the year. While the numbers themselves are meaningful, the expectations of the numbers (which the stock market has already priced in) is equally if not more important. IE. if the market were expecting very poor inflation numbers, thereby declining prior to the CPI release we might see a market rally after the numbers AND vice versa. 

''The Consumer Price Index for All Urban Consumers (CPI-U) increased 1.2 percent in March on a seasonally adjusted basis after rising 0.8 percent in February, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 8.5 percent before seasonal adjustment.

Increases in the indexes for gasoline, shelter, and food were the largest contributors to the seasonally adjusted all items increase. The gasoline index rose 18.3 percent in March and accounted for over half of the all items monthly increase; other energy component indexes also increased. The food index rose 1.0 percent and the food at home index rose 1.5 percent.

The index for all items less food and energy rose 0.3 percent in March following a 0.5-percent increase the prior month. The shelter index was by far the biggest factor in the increase, with a broad set of other indexes also contributing, including those for airline fares, household furnishings and operations, medical care, and motor vehicle insurance. In contrast, the index for used cars and trucks fell 3.8 percent over the month.

The all items index continued to accelerate, rising 8.5 percent for the 12 months ending March, the largest 12-month increase since the period ending December 1981. The all items less food and energy index rose 6.5 percent, the largest 12-month change since the period ending August 1982. The energy index rose 32.0 percent over the last year, and the food index increased 8.8 percent, the largest 12-month increase since the period ending May 1981.'' - published from the Bureau of Labor Statistics

The initial movement of the markets on Tuesday was higher, before eventually relinquishing the gains at the day's end as fears remain elevated on Russia/Ukraine, yield curves, and the fact that the market was pulling back off from the late March rally. 

"Markets reacted positively to the report as stocks rose and government bond yields declined.

“The big news in the March report was that core price pressures finally appear to be moderating,” wrote Andrew Hunter, senior U.S. economist at Capital Economics. Hunter said he thinks the March increase will “mark the peak” for inflation as year-over-year comparisons drive the numbers lower and energy prices subside.

Federal Reserve Governor Lael Brainard said the slowing increase in core CPI is a “welcome” development in the effort to bring down inflation.

″“I’ll be looking to see whether we continue to see moderation in the months ahead,” Brainard told the Wall Street Journal." - CNBC

Utilities and energy stocks are the only two sectors positive in the market YTD.  So if you think you're the only one not making any money, perhaps careful consideration into just how tough this environment has been should be taken.  With rising rates set as a headwind for utilities in the future due to their large swaths of debt and the price of crude oil having already doubled in 12 months, it will be interesting to see if these two sectors can continue their run or if the reversal to the mean is just around the corner...