The inflation essay due on Tuesday could produce some alarming news

February 15, 2023: -Just as Federal Reserve officials have grown optimistic that inflation is cooling, the news could counter that narrative.

On Tuesday, all market eyes will be on the Labor Department’s consumer price index release. This widely followed inflation gauge measures the prices for dozens of goods and services span the economy.

The CPI trends were lower as 2022 came to a close. But 2023 will show that inflation was strong, perhaps even more vital than Wall Street anticipated.

“We have got different types of surprises on the soft side for the previous three months. It wouldn’t be surprising if we get surprised on the hot side in January,” stated Mark Zandi, chief economist at Moody’s Analytics.

According to Dow Jones, economists expect that CPI will show a 0.4% raise in January, which would change into 6.2% annual growth. The so-called core CPI is projected to rise by 0.3% and 5.5%, excluding food and energy.

However, there are a few indications the amount could be even increased.

The Fed’s “Nowcast” tracker of CPI members points toward inflation growth of 0.65% every month and 6.5% yearly. On the core, the outlook is 0.46% and 5.6%.

Over time, the Cleveland Fed stated that its methodology outperforms other high-profile forecasters. The Fed model is related to what its authors stated are fewer variables than the CPI report. It uses more real-time data instead of the backwards-looking numbers more often found in government reports.