The Bureau of Labor Statistics will release the US CPI data for March today. How far the inflation has decreased over the past month remains to be seen. The Consumer Price Index (CPI) for March will be announced on April 12, 2023, at 8.30 a.m. Eastern Time.

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After falling for eight straight months, the annual inflation rate in the US dropped from 6.4% in January to 6% in February 2023, the lowest level since September 2021. While inflation has decreased from a several-decade high of 9.1%, it is still significantly higher than the central bank’s target of 2%.

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The US Federal Reserve is still concerned about sticky inflation, and softer inflation data may allow the US Fed to go for a 25 bps rate hike at the FOMC meeting on May 2. The way ahead for the Fed may not be as straightforward as it appears given the recent increase in oil prices brought on by OPEC+’s announcement of an unexpected reduction in crude production on April 2.

The stock market expects headline annual inflation to remain unchanged at 6% in March, while the core gauge is also seen as little changed around 5.5%. The US Fed’s monetary policy is more heavily influenced by the data on core inflation. According to the BLS data release anticipated on Wednesday, the core consumer price index, which excludes food and energy and more accurately captures the magnitude of underlying inflation affecting US families, is forecast to increase 0.4% in March.

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If the annual US inflation rate for March also stays persistently high, the US Fed will likely continue raising interest rates in the coming year. On the flip side, there is growing pressure on the US Fed to go slow as the SVB banking crisis and higher interest rates have wreaked havoc on the financial viability of several US regional banks. The US CPI data is regularly monitored by market participants, analysts, investors, and traders in order to make investment decisions for their portfolios.

Meanwhile, China’s March inflation data show that the economy of China is undergoing a process of disinflation, which suggests that there is more room for monetary policy easing to boost demand.