Kimberly Adams

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.

And the Fed, when they actually talk about inflation and what they target, they use a separate measure called the PCE deflator.

And right now they're measuring the same thing, the CPI and the PCE deflator.

So they do tend to track together over time.

But right now there is a pretty unique gap between the two in inflation.

So I would just flag that as something to keep an eye on.

Right now, if you look at what the CPI implies for the PCE deflator, it looks like the inflation as measured by the PCE is running a little bit stronger than what the CPI is actually suggesting at this time.