US Inflation Gauges Likely Diverged Before War in Iran

(Bloomberg) — A pair of inflation reports, including the Federal Reserve’s preferred price gauge, surface in the coming week after a dismal February jobs report that challenged perceptions the labor market is stabilizing.

The consumer price index report on Wednesday is projected to show a core inflation measure, which strips out volatile food and energy costs, rose just 0.2% in February. That would suggest some easing in price pressures before the outbreak of the war in Iran introduced new uncertainty about the inflation outlook.

Data out Friday, however, will likely paint a picture of more stubborn inflation. Economists see the Fed’s favored core personal consumption expenditures price index up 0.4% again in January. Compared with the same month last year, the median forecast calls for a 3% increase — little changed from the end of 2024.

The latest readings on inflation cover periods before the US and Israel started a bombing campaign against Iran. With military operations ongoing, and no indications of how long they’ll continue, oil prices have soared as a swath of refineries in the region reduce output.

Americans are already paying more to drive following one of the biggest weekly increases in retail gasoline prices since 2005, when Hurricane Katrina shut refineries along the Gulf Coast. The spike in prices at the pump will likely translate into higher overall inflation in March.

With annual inflation holding above the Fed’s 2% goal, policymakers are likely to keep interest rates unchanged at their March 17-18 meeting. US central bankers in the coming week will observe a blackout period that prohibits comments about the economy or monetary policy.

What Bloomberg Economics Says:

“Following February’s dismal payrolls print, the month’s CPI report will be the next catalyst for market bets on the Fed funds rate. Later in the week, the Fed’s preferred inflation indicator — the core PCE deflator — should come in hot for January. But markets may discount a hot reading on January PCE inflation if the more timely February CPI is as tepid as we expect.”

—Anna Wong, Stuart Paul, Eliza Winger, Chris G. Collins, Alex Tanzi and Troy Durie, economists. For full analysis, click here

The PCE price figures for January are part of the government’s income and spending report. Economists forecast little change in inflation-adjusted consumer spending for the month. They’ll also monitor disposable income data to help gauge shoppers’ buying power in the coming months as the labor market struggles for momentum.

Also on Friday, January job openings figures will further illustrate the level of demand for labor. The same day, the University of Michigan’s preliminary March survey of consumers will offer a fresh look at how Americans view the impact of the Iran conflict on their wallets, as well as an update on their attitudes about the job market and inflation.

For more, read Bloomberg Economics’ full Week Ahead for the US Statistics Canada will release February jobs data after January’s roughly 25,000-job loss and a 6.5% unemployment rate flattered by falling participation. US tariffs may keep weighing on hiring, while slower immigration constrains labor-force growth.

January’s trade report will show whether Canada’s deficit kept narrowing and if an export rebound led by gold shipments to non-US markets persisted.

Elsewhere, Chinese inflation, Japanese wage numbers, UK gross domestic product, German factory orders and Mexican consumer prices may be among the highlights.

Click here for what happened last week, and below is our wrap of what’s coming up in the global economy.

Asia

Asia’s policymakers head into the week facing a fresh geopolitical shock — and the risk of an energy price surge — at a time when domestic demand across parts of the region remains uneven and fragile.

With many economies heavily reliant on Middle Eastern oil, any sustained price surge would pose a dual threat — squeezing growth while complicating inflation dynamics.

Japan sets the tone early with wages, current-account and trade figures on Monday, followed by final fourth-quarter GDP the following day. Household spending and private demand will be scrutinized for signs that the economy can withstand higher import costs should oil prices stay elevated.

Later in the week, producer prices and machinery orders will offer further clues on the economy at a time when the Bank of Japan is weighing the durability of its inflation cycle.

Also on Monday, China releases producer prices and CPI figures. Later in the week, the Asian giant releases credit aggregates, loans and money supply figures that will test whether policy support is gaining traction, while trade numbers will indicate how resilient exports remain against a more uncertain global backdrop.

South Korea publishes updated fourth quarter GDP figures on Tuesday while Australia has consumer and business confidence figures — just one week before the Reserve Bank’s March policy meeting where a back-to-back rate hike is a “live” possibility.

India reports February inflation on Thursday, a key input for the country’s central bank which is likely to keep policy rates around current levels for an extended period as price pressures remain benign. It will also publish trade data for February.

South Korea publishes early-month trade readings, a timely gauge of export momentum in semiconductors and autos. Taiwan’s trade data will similarly be parsed for tech-cycle signals.

New Zealand rounds out the week with manufacturing activity and migration data, shedding light on capacity pressures and growth momentum as the Reserve Bank keeps a wary eye on inflation expectations

For more, read Bloomberg Economics’ full Week Ahead for Asia Europe, Middle East, Africa

In the euro zone, several reports for January will offer glimpses of how the region’s manufacturing fared at the start of the first quarter.

A key focus will be Germany, Europe’s biggest economy, where industrial production and factory orders on Monday will show any further impact from debt-fueled government spending on infrastructure and defense after some improvement at the end of 2025.

Trade numbers both there and in France are published the following day, with production data for Italy and the whole euro region due on Friday.

European Central Bank policymakers will enter a quiet period on Thursday in advance of their March 19 rate decision. Among appearances before then, Executive Board member Isabel Schnabel and Vice President Luis de Guindos will speak on Wednesday.

On the political side, euro-zone finance ministers meet in Brussels at the start of the week, a gathering at which assessing fallout from the Middle East crisis is likely to feature.

In the UK, monthly data on GDP are predicted to show an acceleration in January. While such a result would point to a brighter start to the year, the Iran conflict could still hurt activity if it persists.

Swiss voters go to the polls on Sunday for one of their country’s regular round of plebiscites. They’re likely to back a measure that would seek to create constitutional safeguards for the availability of cash, even as people there increasingly pay by card.

Turning to the Nordics, Sweden’s monthly GDP indicator will be published on Tuesday. So will Norwegian inflation, which economists predict to slow to a 10-month low.

Looking east, Romania’s ruling coalition will make a new attempt to reach a compromise on the long-delayed 2026 budget, looking to reduce the deficit to 6.2% of output.

And the Bank of Russia will watch inflation data on Friday for signs that a spike in price growth — after an increase in value-added tax — is starting to ease before its rate decision on March 20.

For more, read Bloomberg Economics’ full Week Ahead for EMEA Some monetary meetings are scheduled around the region on Thursday:

Turkey’s central bank is expected to leave its rate unchanged at 37%, with inflation risks skewed higher because of the Middle East conflict’s impact on oil prices. An acceleration in inflation to more than 31% will also keep officials cautious. Serbian policymakers will set borrowing costs the same day. The central bank has kept its rate steady since last cutting it in 2024. And in Angola, officials may cut their benchmark for a fourth successive meeting as inflation in the oil-producing southern African nation continues to weaken. Prices climbed at the slowest pace in 2 1/2 years in January. Latin America

The coming week features February consumer price reports from three of the region’s big economies, too soon for the expected inflation shocks of the Iran war to make an appreciable dent.

Mexico’s headline readings have been creeping higher since July and now threaten to breach the 4% top of the central bank’s target range.

The most recent Citi survey of Mexico economists published on March 5 showed a very slim consensus expecting a quarter-point cut to 6.75% at Banxico’s March 26 meeting.

In Argentina, President Javier Milei’s inflation fighting strategy has lost more than a bit of traction: January’s annual print rose for a third straight month while monthly figures haven’t cooled since May.

Economy Minister Luis Caputo on March 2 predicted that February data should see the monthly reading come down from 2.9% in January.

Later on Thursday, Peru’s central bank will likely keep its key rate at 4.25% for a sixth month. The economy is operating near its potential, though a natural gas crisis is certain to pressure March’s monthly inflation readings.

Rounding out the week, full-month data for Brazil can be expected to show inflation slowing below 4%, likely good enough for at least a quarter-point rate cut by the central bank on March 18.

Central bank monetary policy director Nilton David on March 5 said the Iran war adds a new layer of risk to Brazil’s economic outlook, and could argue for a reassessment of how the bank calibrates monetary policy after this month’s meeting. Latam’s No. 1 economy will also post retail sales and industrial output figures in the coming week.

For more, read Bloomberg Economics’ full Week Ahead for Latin America –With assistance from Swati Pandey, Laura Dhillon Kane, Piotr Skolimowski, Monique Vanek, Robert Jameson, Mark Evans, Beril Akman, Tony Halpin and Candido Mendes.

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