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Headline and Core Inflation Metrics Expected To Ease

  • February inflation data is due today at 1200GMT/0600Local, where headline and core inflation are expected to dip to 7.68% and 8.35% respectively.
  • The headline should continue to increase the gap with the 8.70% peak in September, but remain well above the 3.0% +/- 1 ppt target. Food and energy are expected to drive the decline, with core goods also contributing. However, core services is likely to accelerate and remain a concern. The result would be in line with central bank expectations for 7.7% average inflation in 1Q.
  • JPMorgan noted that this week’s final CPI print should reinforce their lingering concerns on sticky underlying inflation. However, beyond these aggregate measures, their focus remains on sequential core inflation for guidance on the underlying trend. On the surface, core price momentum is modestly slowing but there are several caveats which include the fact that price gains sustained at 0.6% m/m are consistent with near 7.5%oya inflation in one year’s time, about 2.5 times the central bank’s target.
  • Nominal wages data will cross Friday, but the clear focus will be on the US employment report on Friday.

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