Inflation Data Released, CPI Data Hits 2.8%

US inflation data for February came in softer than expected. The CPI rose 0.2% month-over-month—below the 0.3% forecast—with headline inflation at 2.8% YoY and core CPI at 3.1% YoY. Following the report, Bitcoin surged over 1% to $84,100, and Nasdaq 100 futures advanced by 1.5%. The milder inflation data has revived hopes for Fed rate cuts this spring and summer, with further clarity expected from Thursday’s PPI report.

The U.S. consumer price index rose 0.2% in February, below the forecast of 0.3%. Core CPI, which excludes food and energy, also increased by 0.2%, missing the 0.3% estimate. This softer inflation data has boosted investor sentiment, leading to a surge in both Bitcoin and Wall Street markets.

February’s US inflation data came in slightly below forecasts. The headline CPI registered a 2.8% year-over-year increase, compared to the estimated 2.9%, and rose 0.2% month-over-month, below the expected 0.3%. Similarly, core CPI—excluding food and energy—was 3.1% YoY and 0.2% MoM, underperforming the forecasts of 3.2% YoY and 0.3% MoM. This softer inflation print may influence future Federal Reserve policy and market sentiment.

The post reports on the U.S. Consumer Price Index (CPI) data, a key inflation indicator, showing lower-than-expected inflation rates, with the overall CPI at +2.8% and the core CPI at +3.1%, both below forecasts of +2.9% and +3.2%, respectively.

The US Dollar Index (DXY) traded broadly flat on Wednesday as traders awaited February’s US CPI release, with expectations for a slight easing in both headline and core inflation. Meanwhile, analysts noted that President Trump’s tariffs are inflationary. On the geopolitical front, China has vowed to retaliate over US tariffs, and the EU is set to announce countermeasures on April 13, according to Ursula Von Der Leyen. In news, a ceasefire deal in the Ukraine-Russia conflict now hinges on Russia’s response.

The Consumer Price Index (CPI) is forecast to rise 0.3% month-over-month, with annual inflation cooling to 2.9% from 3%. Core CPI, excluding food and energy, is projected at 3.2%, down from 3.3% last month. A stronger-than-expected print could postpone Fed rate cuts, potentially triggering a sell-off in equities and bonds. Conversely, a softer print might spark a relief rally, especially in tech and large-cap stocks that have been struggling in recent sessions. Investors and analysts closely monitor these key figures.

S&P Global Market Intelligence projects a slowdown in US GDP growth, with estimates falling from 2.8% in 2024 to 1.9% in both 2025 and 2026, and further easing to 1.6% in 2027. The report attributes the weaker outlook to a slowdown in the first half of 2025. Additionally, the firm expects the Federal Reserve to keep interest rates unchanged until December 2025, reflecting cautious optimism amid economic headwinds.

A growing number of economists are sounding the alarm over a heightened risk of recession in the US. JP Morgan has raised its recession likelihood from 30% to 40%, blaming policy shifts that are “tilting away from growth.” Similarly, Moody’s Analytics chief economist Mark Zandi increased his forecast from 15% to 35%, citing tariffs and trade disruptions. This caution comes as the S&P 500 hits its lowest level since September, reflecting mounting investor concerns over economic uncertainty and trade tensions.

Bitcoin traded near $82,700 on Wednesday, stabilizing after recent losses. The cryptocurrency had dropped 9.14% in one day on Sunday, falling below its 200-day EMA of $85,664, before finding support at $78,258 and rebounding 5.52% on Tuesday. With the US CPI report set for Wednesday and PPI data on Thursday, analysts expect crypto markets to react sharply as inflation trends shape Federal Reserve rate expectations.

US CPI coming up later today has intensified inflation concerns, even before tariffs kick in. Since mid-2024, both the monthly CPI and core CPI figures have been on an upward trend. While the Core PCE remains under control, continued increases in CPI could undermine hopes of achieving a 2% inflation rate over the next 12 months. This trend raises questions about the effectiveness of current monetary policy and its ability to rein in inflation without further economic adjustments.

US CPI data is set for release today at 8:30 AM ET, with market consensus expecting a 2.9% year-over-year increase. If the CPI comes in above 2.9%, it could negatively impact the markets. If it matches 2.9%, a modest market rally may occur. However, if the CPI falls below 2.9%, the markets are expected to see a strong upward push.

The US CPI data will be released today at 8:30 AM ET.

The Consumer Price Index (CPI) tracks the monthly change in prices that U.S. consumers pay for goods and services. The Bureau of Labor Statistics calculates it by taking a weighted average of prices for a basket of items that reflects typical consumer spending. Essentially, the CPI is a measure of inflation or deflation. It differs from the Producer Price Index (PPI), which uses separate survey methods and weights to track the prices producers receive, rather than what consumers actually pay.

Tonight’s CPI release could set the tone for rate expectations, with markets now pricing in four Fed cuts for the year—up significantly from just one in January. Volatility has spiked, as evidenced by the VIX, which peaked at 28 before settling at 26.6. Additionally, the Cboe VIX term structure flipping into backwardation hints at a potential market floor, offering a glimmer of stability amid the current turbulence.