Oil spike lifts inflation reports

U.S. inflation jumped in March as gasoline prices posted their biggest monthly increase since 1967, pushing the Consumer Price Index up 0.9% in a single month. (bls.gov) The Bureau of Labor Statistics said consumer prices were up 3.3% from a year earlier in March, after a 2.4% annual rate in February. Energy prices rose 10.9% in the month, and gasoline alone surged 21.2%, accounting for nearly three-quarters of the monthly increase. (bls.gov) The same shock hit households fast. The University of Michigan’s preliminary April survey put consumer sentiment at 47.6, down from 53.3 in March, the lowest reading in the survey’s history, while one-year inflation expectations rose to 4.8%. (cnbc.com) Oil moves into inflation first through the pump, then through shipping, air travel, and other fuel-heavy costs. In March, core inflation stayed comparatively mild at 0.2% for the month and 2.6% for the year, which means the first wave was concentrated in energy rather than broad-based prices. (bls.gov) (cnbc.com) That split is what economists are watching now. The Federal Reserve Bank of Cleveland’s April 10 nowcast estimated April core Consumer Price Index inflation at 0.21% month over month and 2.56% year over year, suggesting the underlying trend had not yet broken even as headline inflation stayed elevated. (clevelandfed.org) Consumers, though, were already reacting before the full price pass-through showed up in official data. The University of Michigan said interviews for its March survey were collected through March 23, with about two-thirds completed after the start of the U.S. military conflict in Iran, and respondents reported sharply weaker views on personal finances and business conditions. (umich.edu) (sca.isr.umich.edu) Gas prices remained high into April. AAA listed the national average for regular gasoline at $4.125 a gallon on April 12, and the Energy Information Administration said on April 7 that it expected Brent crude to stay above $95 a barrel for the next two months because of continued supply disruption risk. (aaa.com) (eia.gov) Federal Reserve officials have not described the oil shock the same way. New York Federal Reserve President John Williams said on April 7 that his outlook for underlying inflation was “largely unchanged,” while San Francisco Federal Reserve President Mary Daly said on April 10 that the oil shock meant getting inflation down could take longer. (bloomberg.com) (msn.com) For now, the data show a two-speed inflation story: a sudden energy spike in March and a slower test ahead for everything else. If oil stays high, the next reports will show whether the shock stops at the gas station or spreads deeper into the prices households pay every week. (bls.gov) (clevelandfed.org)