Kimberly Adams

And what the report suggests to me is that, yes, inflation is not as bad as we had feared by this point in time, but we're also not seeing progress either.

And now we got to think about this energy price shock.

And so while this report is encouraging, I do think it feels a little dated at this point in time, especially once we turn to the March CPI and get some of that immediate reaction to what we're seeing in the conflict in the Middle East.

Right.

This is the giant asterisk on this report, which is that all of this data was before we went to war with Iran.

Right.

Correct.

And so how are economists, do you think, factoring that in when reading this report?

So if you look at the energy line, for instance, you can see that gasoline prices actually rose pretty solid in February, a little bit stronger than I think you would expect in a, let's say, a quote unquote typical February.

And if you also think about the really bad winter storms on the Northeast, you wouldn't expect gasoline prices to rise as much as they did.

But if you look at what was going on in oil, oil prices were actually rising in February in anticipation of potential escalation in the Middle East.

And you were seeing that risk premium being priced in.

And that got directly translated to consumers already in February with a pretty decent gain in gasoline prices.

And that gain is only just going to get stronger in March.

What does this mean for the Fed?

The CPI reading like this might be encouraging to folks on Wall Street that wanted another interest rate cut.

But as you said, this oil price shock has now come down the pipeline.

That's going to change everything.

Right.

And so one thing that I'll say is an important caveat here is we're looking at the Consumer Price Index.