Gas prices are displayed at a gas station on March 12, 2024 in Chicago, Illinois.
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A closely-watched Labor Department report due Wednesday is expected to show not much progress made in the battle to bring down inflation.
If so, that would be bad news for consumers, market participants and Federal Reserve officials, who are hoping price increases slow enough so that they can start gradually cutting interest rates later this year.
The consumer price index, which measures costs for a wide-ranging basket of goods and services across the $27.4 trillion U.S. economy, is expected to register increases of 0.3% both for the all-items measure as well as the core yardstick that excludes volatile food and energy.
On a 12-month basis that would put the inflation rates at 3.4% and 3.7% respectively, a 0.2 percentage point increase in the headline rate from February, just a 0.1 percentage point decrease for the core rate, and both still a far cry from the central bank’s 2% target.
“We’re not headed there fast enough or convincing enough and I think that’s what this report is going to show,” said Dan North, senior economist at Allianz Trade North America.
The report will be released at 8:30 a.m. ET.
Progress, but not enough
North said he expects Fed officials to view the report pretty much the same way, backing up comments they’ve been making for weeks that they need more evidence that inflation is convincingly on its way back to 2% before rate cuts can happen.
“Moving convincingly toward 2% doesn’t just mean hitting 2% for one month. It means hitting 2% or less for months and months in a row,” North said. “We’re a long way from that, and that’s probably what’s going to show tomorrow as well.”
To be sure, inflation has come down dramatically from its peak above 9% in June 2022. The Fed enacted 11 interest rate hikes form March 2022 to July 2023 totaling 5.25 percentage points for its benchmark overnight borrowing rate known as the federal funds rate.
But…
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