Gasoline explains 26 bp of the 80 bp of inflation in February. No surprise, and it will be worse in March.
What you're not hearing about inflation's canary in the coal mine
Monday, March 14, 2022
Inflation expectations have broken out to the upside! (To the Fed's target, that is.)
Update to Strategic View
February inflation at 7.9% is the hottest yet, but more than all the excess inflation versus target came from just half the CPI basket. With gasoline at all-time highs due to the Russian invasion of Ukraine, inflation expectations have broken out to levels not seen since 2014 -- but they still haven't quite hit the Fed's target. Abstracting from geopolitical risks, the FOMC on Wednesday should lift off because the economy is strong, and inflation expectations are at least near-target. But expectations still point to inflation being transitory. Expectations are sharply divided politically, with Republicans seeing a great deal of upside risk, and Democrats seeing none.