Inflation: February CPI is expected to show slowest annual growth since September 2021

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February is expected to show a sustained modest decline in consumer prices as investors weigh the latest report against the backdrop of the surprise collapse of Silicon Valley last week.

The closely watched Consumer Price Index (CPI), set for release Tuesday at 8:30 a.m. ET, is expected to show a slight decline in consumer prices last month, with headline inflation up 6 percent from the previous year. % growth is expected. January’s 6.4% annualized gain, according to Bloomberg estimates.

A 6% increase in consumer prices would mark the slowest annual increase since September 2021.

“Core” inflation, which strips out the more volatile costs of food and energy, is forecast to rise 5.5% from a year ago and 0.4% from the previous month in February, a more modest figure than the headline figures. indicates recession.

Here are the expectations for the report’s key figures, according to Bloomberg consensus estimates:

  • CPI YoY Change: +6% vs +6.4% in January

  • Change in CPI MOM: +0.4% vs +0.5% in January

  • “Core” CPI YoY Change (eg Food & Gas): +5.5% vs +5.6% in January

  • “Core” CPI MoM Changes (eg Food & Gas): +0.4% vs +0.4% in January

Tuesday’s comes just over a week before the Fed’s next policy announcement, scheduled for March 22, at which investors now expect the central to raise interest rates by 25 basis points, or 0.25%.

Last week, investors saw a better chance of the Fed raising rates by 50 basis points this month after two days of Fed Chair Jerome Powell’s testimony that insisted interest rates were more likely than previously forecast. .

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Developments in the banking sector over the past week have changed this outlook, with some Wall Street analysts citing the recent failure of Silicon Valley Bank (SIVB) and the Federal Reserve’s plans to pose a risk of financial instability.

The Fed, whose current benchmark interest rate target is 4.5%-4.75%, has raised rates by a cumulative 4.5% over the past year in an effort to tame inflation. Consumer prices peaked last summer, reaching a nearly 40-year high of 9.1%.

The Federal Reserve has raised interest rates a cumulative 4.5% over the past year in an effort to tame inflation as Fed Chair Jerome Powell remains committed to accommodative monetary policy.

Alexandra Canal is a senior entertainment and reporter at Yahoo Finance. follow him on twitter @alliecanal8193 and email her at [email protected]

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