Core CPI Prints Cooler Than Expected Despite Biggest Jump In Energy Prices Since 2005

Core CPI Prints Cooler Than Expected Despite Biggest Jump In Energy Prices Since 2005

While PCE showed some signs of higher energy prices leaking into inflation prints, it was still February data. As we previewed, today's CPI data is for March and will bear the full brunt of the Iran War's impact on energy costs after Core CPI fell to its lowest in four years in February.

The headline CPI soared 0.9% MoM (as expected) and while it was a big MoM jump, Consumer Prices rose 3.3% YoY (up from +2.4% YoY in February), but below the 3.4% YoY exp...

Source: Bloomberg

This is the highest headline CPI YoY since April 2024 and biggest MoM jump since June 2022.

Obviously, Energy dominated the rise in headline CPI...

CPI Highlights:

CPI rose 0.9% MoM in March, up from 0.3% in February; it rose 3.3% YoY, up from 2.4% in February.

The index for energy rose 10.9% in March, led by a 21.2% increase in the index for gasoline which accounted for nearly three quarters of the monthly all items increase.


The shelter index also increased in March, rising 0.3%.


The index for food was unchanged over the month as the index for food away from home rose 0.2%, while the index for food at home fell 0.2%.



Core CPI rose 0.2% in March: Indexes that increased over the month include airline fares, apparel, household furnishings and operations, education, and new vehicles. Conversely, the indexes for medical care, personal care, and used cars and trucks were among the major indexes that decreased in March.


Core CPI rose 3.3% YoY for the 12 months ending March, after rising 2.4% in February. The all items less food and energy index rose 2.6% over the year, following a 2.5% increase over the 12 months ending February. The energy index increased 12.5% for the 12 months ending March. The food index increased 2.7% over the last year.

Food:

The index for food was unchanged in March after rising 0.4% in February.


The food at home index declined 0.2% over the month. Four of the six major grocery store food group indexes decreased in March.


The index for meats, poultry, fish, and eggs decreased 0.6% over the month as the index for eggs declined 3.4%.


The cereals and bakery products index also decreased 0.6% in March, as did the dairy and related products index.


The index for nonalcoholic beverages fell 0.3% over the month. In contrast, the fruits and vegetables index rose 1.0% in March.


The index for other food at home was unchanged over the month.


The food away from home index rose 0.2% in March. The index for full service meals rose 0.3% over the month and the index for limited service meals rose 0.2%.

Energy CPI highlights - a gas/electricity hammering thanks to Iran/Data centers:

The index for energy increased 10.9 percent in March, the largest monthly increase in the index since September 2005.


The gasoline index increased 21.2 percent over the month, the largest monthly increase since the series was first published in 1967. (Before seasonal adjustment, gasoline prices increased 24.9% in March.)


The index for electricity rose 0.8% in March.


The fuel oil index increased 30.7% over the month, the largest monthly increase in the index since February 2000. Conversely, the index for natural gas decreased 0.9% over the month.

Gasoline's surge accounted for two-thirds of the rise in headline CPI...

Energy CPI is tracking WTI (and has room to rise further if oil remains disrupted)...

Core CPI (excluding Energy and Food prices) printed cooler than expected (+0.2% MoM vs +0.3% MoM exp) with the Core YoY rising only modestly from February...

Source: Bloomberg

Core Services costs slowed modestly...

Source: Bloomberg

Under the hood of the Core print, things were much more mixed:

On the softer side, used car prices declined 0.4% month-over-month, recreation services prices declined 0.4% (likely partially reflecting residual seasonality in the sporting events subcomponent, which declined 10% month-over-month), prescription drugs prices declined 1.5%, medical care services prices were flat (reflecting a 1.9% decline in home healthcare and a 1.4% decline in health insurance), and legal services declined 4%. 


On the stronger side, airfares rose 3%, apparel prices rose 1% (possibly reflecting tariff passthrough), owners’ equivalent rent accelerated to 0.28% (vs. 0.22% over the prior two months, reflecting payback from an unusually soft reading six months prior), and software prices rose 4% month-over-month (after rising 4.9% month-over-month on average over the previous three months).

Obviously, short-term (annualized) CPI is exploding higher...

SuperCore CPI (Services ex-Shelter) lifted very modestly on a YoY basis with Transportation Services the biggest driver...

Source: Bloomberg

The trend for slowing cost-of-housing inflation remains lower, but March did see notable MoM jumps...

Shelter inflation up 0.4% MoM, biggest monthly increase since Jan 2025. also up 3.02% YoY, first annual increase since Sept 2025


Rent inflation up 0.2% MoM, and up 2.56% YoY, slowest annual increase since Oct 2021

Nothing too surprising here for policymakers to fret over and rate-cut odds are modestly higher since the print.

The market seems willing right now to look through the spike - let's just hope the '70s analog is not about to play out.

Finally, based on the details in the CPI report, Goldman Sachs estimates that the core PCE price index rose 0.22% in March (vs. our expectation of 0.23% prior to today's CPI report), corresponding to a year-over-year rate of +3.10%.

Additionally, we expect that the headline PCE price index increased 0.60% in March, or increased 3.40% from a year earlier.

Goldman estimates that market-based core PCE rose 0.22% in March.

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Tyler Durden
Fri, 04/10/2026 - 10:55