Wall Street is writing off the latest inflation report in the wake of the U.S.-Iran War’s impact on energy prices. The consumer price index rose 0.3% in February from January, and 2.4% from a year ago, the Bureau of Labor Statistics reported Wednesday morning. Both seasonally adjusted figures were in line with consensus forecasts from economists surveyed by Dow Jones. But investors already see the readings as obsolete, reflecting a pre-war economy. U.S. and Israeli strikes on Iran began on the final day of the month, Feb. 28. Instead, investors are gaming out what recent volatility in energy prices in the wake of the war will mean future Federal Reserve interest rate policy. “This is a welcomed number on the surface, but one that may already be outdated,” said Alexandra Wilson-Elizondo, global investing chief of multi-asset solutions at Goldman Sachs Asset Management. Oil prices have whipsawed as war in the Middle East came to a head this month. U.S. West Texas Intermediate crude oil prices last traded around $86 a barrel after topping $100 earlier this week. Average national prices for a gallon of gasoline passed $3.50 this week . Against that energy price turmoil, Josh Jamner, senior investment strategy analyst at ClearBridge Investments, called Wednesday’s report “ho-hum” and “stale.” Jamner said to expect muted reactions in financial markets to the release, typically closely monitored on Wall Street. ‘Calm before the storm’ This broader uncertainty around the path of inflation comes at a pivotal time for the Fed, which is debating whether to focus on keeping prices down or supporting the labor market. “The Fed now has tariffs, potential tariff refunds, higher energy prices and weakening employment to sort through in order to get any kind of clarity on what to do next,” said Skyler Weinand, investing chief at Regan Capital. Weinand said to say goodbye to annual inflation readings around 2.4%, blaming energy price spikes alongside potential tariff rebates. Instead, he said to expect 12-month CPI readings to move back to 3% or more. The central bank held interest rates steady at its last policy meeting in January. Fed funds futures are pricing in a near certainty that the central bank once again keeps rates unchanged when policymakers meet next week, according to CME’s FedWatch tool. “This is the calm before the storm that will show up due to surging gasoline prices in March,” said Sonu Varghese, Chief Macro Strategist Carson Group. Even excluding the energy shock, Varghese said Wednesday’s report still shows “that the Fed has an inflation problem.”
What Wall Street is saying after latest consumer inflation report as investors fret over rising oil prices
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