According to APP, the U.S. Bureau of Labor Statistics (BLS) will release the March Consumer Price Index (CPI) data today. The report is expected to show a significant rebound in inflation, mainly driven by a sharp rise in oil prices following the outbreak of the Middle East conflict on February 28.

Specifically, the month-on-month CPI is expected to rise by 0.9%, higher than the 0.3% recorded in February; the year-on-year CPI is expected to rise to 3.3%, a significant jump of 1 percentage point from 2.4% in February, reaching the highest level since May 2024. The core CPI (excluding food and energy prices) is expected to rise by 0.3% month-on-month and 2.7% year-on-year, indicating that price pressures in the non-energy sector remain relatively restrained.

Since the start of the conflict on February 28, West Texas Intermediate (WTI) crude oil has risen by nearly 40%. Even after a significant pullback following the announcement of a two-week ceasefire agreement between the US and Iran this week, it still surged nearly 50% in March alone, rising from about $67 per barrel to nearly $100 per barrel by the end of the month. TD Securities analysts pointed out, "The recent surge in oil prices will be the main driver of a 0.9% jump in CPI month-on-month. Year-on-year growth will jump by nearly 1 percentage point to 3.3%, a two-year high." They further added, "Core inflation is currently able to withstand the impact of oil prices, and is expected to rise by 0.27% month-on-month. Tariff transmission will continue to push up commodity prices, and hypercore inflation may remain at 0.3%."

The impact of oil prices was rapidly transmitted to the CPI primarily through energy and transportation costs, and coupled with supply chain disruptions, further amplified imported inflationary pressures. Although the ceasefire agreement provided short-term relief, the global crude oil market remains highly volatile, with the latest WTI price hovering around $98 per barrel, reflecting the market's cautious expectations regarding the sustainability of the agreement.

The following table compares the expected changes in key inflation indicators:

This data release comes at a time when the Federal Reserve is in a policy observation window. The rebound in oil-price-driven inflation may temporarily slow the pace of interest rate cuts, but the resilience of core inflation provides policymakers with flexibility. Going forward, key factors to watch include the implementation of the ceasefire agreement, a potential second wave of oil price fluctuations, and the continued impact of tariffs on commodity prices.

Editor's Summary:
The March CPI data is expected to clearly reflect the direct impact of Middle East geopolitical conflicts on US inflation through oil prices. The headline indicator rose significantly while the core indicator remained stable, highlighting the short-term dominant role of energy prices. Investors should pay attention to the market reaction after the data release and how the Federal Reserve seeks a balance between its dual mandate of growth and inflation. Geopolitical easing will be a key variable in the decline of inflation.