Cleveland Fed data shows war impacting headline inflation data

By Michael S. Derby

NEW YORK, April 1 (Reuters) - The Middle East war that’s driven a sharp rise in energy prices and roiled critical supply chains appears on track to hit headline inflation, with a smaller impact on underlying price pressures, the Federal Reserve Bank of Cleveland said in updated data Wednesday.

The bank’s nowcasts of inflation said that on a year-over-year basis the April consumer price index stood at 3.71%, up from the March CPI nowcast of 3.25%. The Fed’s preferred inflation measure, the personal consumption expenditures index, stood at 3.58% for April versus 3.28% for March.

Meanwhile, core prices showed less of an impact. The year-over-year number for core CPI was 2.56% in April from March’s 2.6% while core PCE is forecast to be 3.03% for the current month, versus March’s 2.97%.

The Cleveland Fed nowcasts are updated daily. In comparison, the February overall CPI index was up by 2.4% on a year-over-year basis, while the overall PCE price index had risen by 2.8% in January, from the same month a year ago.

The bank’s inflation “nowcasts” are designed to project where these key inflation measures stand in real-time, and the message they currently portray jibes with the comments of policymakers.

In a separate report, the New York Fed said that labor market tightness eased in February to below normal levels, “driven by declines both in vacancies over effective searchers and in the quits rate.”

The bank also said over the last half year, “wage pressures are now similar to late 2015 levels.”