Rising Gasoline Prices Help Push Up CPI

US CPI figures were higher than expected, putting a dent in hopes of rate cuts over the next few meetings, partly due to rising energy prices.

• MNI: US MAR CPI 0.4%, CORE 0.4%; CPI Y/Y 3.5%, CORE Y/Y 3.8%
• Energy prices rose 1.1% on a seasonally adjusted basis (vs. +2.3% prior), contributing approximately 8 basis points to monthly headline CPI growth.
• The energy complex is facing additional upsides, amid tighter OPEC+ supply, and geopolitical risks in Russia and the Middle East.
• While gasoline exports in the US showed a small build on the week, four-week implied demand remains slightly above normal despite a reversal of gains seen the previous week.
• This will add further support to the complex, and boost gasoline prices further as summer driving season approaches.
• The strength in energy prices, particularly gasoline, will remain elevated in the near term, which undermine the hopes of a near-term rate cut.
• A rate cut could also spur some additional oil demand through rising output, which at current elevated prices would offer more support to the energy complex.