Market Data: CPI Undershoots, But Still Rising

stock market today

Today’s U.S. reports revealed a firm 0.4% February CPI rise, though with a lean 0.1% core price rise, while the MBA mortgage applications index dropped -1.3% at the start of March, though with a 7.2% purchase index climb. The market faces a steep climb in y/y headline CPI to a peak of around 3.7% in May due to hard comparisons, though we expect an unwind into year-end to 3.1%. The plunge in refi activity will cap any y/y MBA index rise, which should lie near 6% by May before falling to the -28% area by year-end. It’s the purchase index that matters, and there, y/y gains should rise to 65% in April before slipping to a flat year-end pace.

Key Points:

  • CPI rose 0.4% after a 0.3% January gain, leaving the y/y metric rising to 1.7% from 1.4%.
  • CPI core rose 0.1% after a flat January figure, leaving the y/y metric slipping to 1.3% from 1.4%.
  • The February headline and core price gains rounded from 0.355% and 0.101% respectively.
  • CPI energy prices rose 3.9% in February, while food prices rose 0.2%.
  • The MBA mortgage applications index dropped -1.3% in the March 5 week.
  • The refi index fell -5.0% into March, while the purchase index climbed 7.2%.

The CPI report slightly undershot estimates with February gains of an expected 0.4% for the headline but with a lean 0.1% rise for the core. The February increases rounded from respective gains of 0.355% and 0.101%.

The lean core figure reflected a -5.1% drop for airline fares, after declines of -3.2% in January and -2.5% in December, alongside -0.9% declines in each of the last three months for used car prices, and a -0.7% drop for apparel prices in February after a 2.2% January surge, and a 0.9% December gain.

stock newsAD - Recover your investment losses! Haselkorn & Thibaut, P.A. is a national law firm that specializes in fighting ONLY on behalf of investors. With a 95% success rate, let us help you recover your investment losses today. Call now 1 888-628-5590 or visit to schedule a free consultation and learn how our experience can help you recover your investment losses. No recovery, no fee.

New vehicle prices were flat in January, while owners’ equivalent rent rose 0.3%. Medical care prices rose 0.5% in January, and tobacco prices rose 0.6%. Services costs were up 0.3%, after being unchanged in January.

The headline CPI was lifted by the largely expected 3.9% January surge in energy prices and a 0.2% rise for food prices. Gasoline prices jumped another 6.4%, after a 7.4% January rise.

The y/y CPI headline gain popped to 1.7% from 1.4% in January and December, and 1.2% in both October and November. The core y/y gain fell to 1.3%, after a January drop to 1.4% from 1.6% over the three months through December.

On a moving average basis, CPI headline and core gains are trending higher, after the sharp pull-back in Q2 of 2020. We have 6-month average price gains of 0.233% for the headline and 0.102% for the core that exceed respective 12-month average gains of 0.139% and 0.106%.

Real average hourly earnings slipped to a 3.4% y/y clip from 3.9% (was 4.0%).

In March, a further climb in gasoline prices should support CPI gains of 0.3% for the headline and 0.2% for the core. The y/y CPI gain should surge to 2.4% from today’s 1.7%, while the y/y core price gain should climb to 1.5% from today’s 1.3%.

stock news

We expect y/y CPI gains to climb to peaks in May of 3.7% for the headline and 2.3% for the core. The steep climb in y/y inflation over the coming months will add to the market narrative that the Fed may be under-appreciating upside inflation risks, though y/y gains will moderate into Q3 and Q4 as comparisons become easier.

Don't miss a thing

Get free professional market insights and stock/ETF reports that contain actionable opportunities written by a former financial advisor and Capitalist who has been investing in the markets for 20+ years.

FREE MARKET REPORTSDon't Miss An Opportunity

Get Free Stock Picks, Macro Market Events & Options Strategies.

Scroll to Top