US CPI Preview: Fed will be encouraged inflation readings have firmed as expected - Wells Fargo

Analysts from Wells Fargo, expected the US CPI reading on Tuesday to show an increase of 0.1% for February. 

Key Quotes: 

“The recent pickup in inflation pressure was underscored by a larger than-expected 0.5 percent gain in the CPI during January. Headline prices have increased 2.1 percent over the year, as higher energy prices provided a lift both on the month and on the year.”

“Core inflation gains were notable in January, notching a 0.3 percent rise during the month on higher prices for goods, particularly used vehicles and apparel, and services prices which were boosted by medical and insurance costs. Core CPI year-over-year growth held steady at 1.8 percent in January, but its 2.9 percent three-month annualized rate suggests the trend is strengthening more recently.”

“The Fed will be encouraged that the inflation readings have firmed as expected, and is likely to proceed with plans to tighten monetary policy.”