Headline CPI inflation is more likely to punch above expectations (0.2%) for three reasons: (A) gasoline and diesel prices have outperformed crude oil, (B) spot natural gas prices have generally continued to climb and will likely pressure both electricity prices and utility gas service prices, and (C) food prices are still likely to be pressured from the effects of Russia’s invasion of Ukraine on agricultural commodity prices. Core PCE will be most notably slowed down by the effects of the first leg of the Medicare sequester. Because these effects fall out of the scope and methodology of CPI, they won't be noticeable ... (full story)