UBS Economics-US Economic Perspectives _March CPI Preview Update Still mo...-114586512

ab8 April 2025Global ResearchUS Economic PerspectivesMarch CPI Preview Update: Still moderateNew information has little impact on our March CPI projection
Despite the Adobe Digital Price Index showing a strong increase in March, our forecast for Thursday's March CPI release is little changed as the strongest components in the Adobe DPI (jewelry (+10.4% NSA), computers (+1.5%), and toys (1.0%)) only modestly pushed up our projection models.Our projection for the March CPI remains on the low side of consensus.
We now project a 0.05% increase for the seasonally-adjusted headline CPI, 6bp lower than the current Bloomberg consensus average of 0.11%. Our projection is 1bp higher than our CPI Preview from last week, while the Bloomberg consensus average is 2bp lower.
Although our projection is below the Bloomberg consensus average, our projected NSA CPI level, at 320.09, is about 4bp above current swaps fixings.
For the core CPI we project a 17bp increase compared to the current Bloomberg consensus average of 27bp. Our projection is unchanged compared to last week, but the Bloomberg consensus average is 2bp lower.
Our full CPI Preview from last week is here and updated spreadsheet with the minor changes brought in today is here.The tariffs announced last week should push up inflation notably starting in May
Our forecast assumes nearly all of the tariffs announced up through last week are fully implemented.
We expect to see only modest impacts of the tariffs in the March and April CPIs, but impacts should begin to clearly appear around the May CPI released on Wednesday, June 11. Monthly core CPI increases are projected to peak at 0.6% from August to October.
Our inflation projections could be too low if: 1. Additional tariffs beyond those announced up through Wednesday last week are implemented (such as additional tariffs on USMCA-compliant imports from Canada and Mexico or today's tariff increase to 104% on US imports from China is in effect for a considerable period); 2. The foreign exchange value of the dollar continues to decline; 3. Domestic US producers raise their prices notably in response to reduced competition or increased demand.
Our inflation projections could be too high if: 1. The tariffs do not go into effect, are lessened, or are not in effect for a significant number of months; 2. The foreign exchange value of the dollar rises notably; 3. The stock market declines significantly (which would push down PCE financial services prices, but have little effect on the CPI). MoM (SA): CPI 0.05%, Core CPI 0.17%YoY (NSA): CPI 2.48%, Core CPI 2.92% NSA index level: CPI 320.090SA index level: Core CPI 326.042This report has been prepared by UBS Brasil CCTVM S.A.. ANALYST CERTIFICATION AND REQUIRED DISCLOSURES, including information on the Quantitative Research Review published by UBS, begin on page 8. EconomicsAmericasAlan DetmeisterEconomist alan.detmeister@ubs.com +1-212-713 1222Jonathan PingleEconomist jonathan.pingle@ubs.com +1