CMSC: Oil price impact has not yet transmitted to core inflation in the United States.

CMSC releases research report stating that the US CPI year-on-year increase is 3.3% in March, due to a significant rise in energy prices, but slightly below the market's expectation of 3.4%. The main reason for this is the moderate trend in core inflation. With the tariff reduction, the month-on-month increase in CPI goods recorded 0.1%. The latest Federal Reserve meeting minutes mentioned that the main driver of core goods inflation is expected to shift from tariff impact to rising oil prices. After the data was released, the 2-year US Treasury yield briefly decreased slightly due to core inflation being lower than expected, while the 10-year Treasury yield increased by around 3 basis points to around 4.309%, and the US dollar index weakened to 98.62. The transmission of energy price shocks to core inflation is still unclear, and CME data still reflects a scenario where interest rates are unlikely to be cut this year. Event: On April 10, 2026, the US Bureau of Labor Statistics released that the CPI increased by 0.9% month-on-month in March (previously 0.3%), and core CPI increased by 0.2% month-on-month (previously 0.2%); CPI increased by 3.3% year-on-year (previously 2.4%), and core CPI increased by 2.6% year-on-year (previously 2.5%). Key points from CMSC are as follows: 1) Overall energy prices in the US increased by 10.9% month-on-month in March (previously 0.6%) Among them, energy commodity prices increased by 21.3% month-on-month (previously 1.1%), with gasoline increasing by 21.2% month-on-month (previously 0.8%), and fuel increasing by 30.7% month-on-month (previously 11.1%). Energy services increased by 0.4% month-on-month (previously 0.2%), with electricity increasing by 0.8% month-on-month (previously -0.7%); while gas services decreased by -0.9% month-on-month (previously 3.1%). As of April 9, Brent crude oil prices had risen to $132 per barrel, despite the US-Iran conflict entering ceasefire negotiations, factors such as energy infrastructure damage and uncertainty in the navigation of the Strait of Hormuz continued to push oil prices higher. With the start of the peak travel season in the US, the energy component of the CPI will face stronger pressure. 2) Food prices remained moderate, with no signs of supply chain pressure transmission Food prices in March increased by 0.0% month-on-month (previously 0.4%), with household food declining by -0.2% month-on-month (previously 0.4%), and non-household food increasing by 0.2% month-on-month (previously 0.3%). As of March 31, the CRB food price index rose to 494.12, up 4% from the beginning of the month, which is expected to drive a moderate increase in the CPI food component. 3) Core CPI increased by 0.2% month-on-month in March (previously 0.2%), lower than the market's expectation of 0.3% Service inflation slowed down, consistent with the moderation of wage growth in the non-farm payroll data for March. Rent increased by 0.3% month-on-month (previously 0.2%), with equivalent rents for homeowners increasing by 0.3% month-on-month (previously 0.2%), and rents for primary residences increasing by 0.2% month-on-month (previously 0.1%). Housing away from home increased by 0.2% month-on-month (previously 1.0%); other accommodations like hotels increased by 0.2% month-on-month (previously 1.1%). With the rise in oil prices, airfares increased by 2.7% month-on-month (previously 1.4%). Overall service CPI increased by 0.2% month-on-month in March (previously 0.3%), with medical care services remaining flat at 0.0% month-on-month (previously 0.6%) and transportation services increasing by 0.6% month-on-month (previously 0.2%). Auto insurance increased by 0.0% month-on-month (previously -0.3%). 4) CPI goods excluding food and energy increased by 0.1% month-on-month in March (previously 0.1%) New transportation equipment increased by 0.1% month-on-month (previously 0.0%), while prices of used cars and trucks decreased by -0.4% month-on-month (previously -0.4%). With the tariff reduction, prices of household appliances decreased by -1.6% month-on-month (previously 3.1%), and prices of furniture and bedding decreased by -0.4% month-on-month (previously 0.0%). Clothing increased by 1.1% month-on-month (previously 1.8%). According to the latest Federal Reserve meeting minutes, the main driver of core goods inflation is expected to shift from tariff impact to rising oil prices, while core service inflation is primarily benefiting from the slowdown in housing inflation. After the data was released, the 2-year US Treasury yield briefly decreased by around 3 basis points due to lower core inflation than expected, but later rebounded to around 3.79%, while the 10-year Treasury yield increased by around 3 basis points to around 4.309%, and the US dollar index weakened to around 98.62. The transmission of energy price shocks to core inflation is still unclear, and CME data still indicates a scenario where interest rates are unlikely to be cut this year.