A measure of wholesale prices increased less than expected in March, providing some potential relief from worries that inflation will hold higher for longer than many economists had expected.

The producer price index rose 0.2% for the month, less than the 0.3% estimate from the Dow Jones consensus and not as much as the 0.6% increase in February, according to a release Thursday from the Labor Department’s Bureau of Labor Statistics.

However, on a 12-month basis, the PPI climbed 2.1%, the biggest gain since April 2023, indicating pipeline pressures that could keep inflation elevated.

Excluding food and energy, the core PPI also rose 0.2%, meeting expectations. Excluding trade services from the core level, the increase was 0.2% monthly but 2.8% from a year ago.

The release comes a day after the BLS reported that consumer prices again rose more than expected in March, raising concerns that the Federal Reserve will be unable to lower interest rates anytime soon.

On the producer price side, March’s gain was pushed by services, which saw a 0.3% increase on the month. Within that category, the index for securities brokerage and other investment-related fees jumped 3.1%.

Conversely, goods prices decreased 0.1%, flipping a 1.2% increase in February. Final demand costs for energy, which have been on the rise lately, actually fell 1.6% on the month. However, wholesale prices for final demand food and goods less food and energy climbed 0.8% and 0.1%, respectively.

Though prices have been rising at the pump, the final demand index for gasoline fell 3.6%. That contrasted with the consumer price index, which showed gasoline up 1.7% on the month.

Markets showed little reaction to the data, with futures tied to major stock indexes slightly higher though Treasury yields declined.

In other economic news Thursday, initial filings for jobless benefits fell to 211,000, a decline of 11,000 from the previous week’s upwardly revised level and below the 217,000 estimate from Dow Jones.

Continuing claims, which run a week behind, increased to 1.82 million, up 28,000 for the period, according to the Labor Department release.

The economic data points are being watched closely as the Federal Reserve contemplates its next moves on monetary policy.

Wednesday’s CPI release jolted markets, which had been anticipating an aggressive series of interest rate cuts this year. The report showed annual inflation running at 3.5%, well above the Fed’s 2% target.

The market now is pricing in the possibility of just two cuts this year, likely not starting until September, according to CME Group data.

MSC, the largest ocean carrier in the world, has joined the list of ocean carriers terminating the delivery of diverted containers outside of the port for shipping clients as a result of the container ship accident near the Port of Baltimore that led to the tragic bridge collapse. With the Baltimore port indefinitely closed, the decision places the onus of cargo pick up at a diverted port and transport to its final destination on the shipper.

In an email to customers obtained by CNBC on Thursday, MSC explained that for customer containers already on the water bound for the Port of Baltimore, cargo will be rerouted and discharged at an alternate port where it will be made available for pick-up.

“For these shipments, the contract of carriage will be declared terminated at this alternate port and storage, D&Ds and on-carriage costs to the initially intended destination will be for the sole cargo’s account,” the MSC advisory said.

MSC added that “passage to and from Baltimore is at this time impossible and will not be reestablished for several weeks if not months.”

CMA CGM, COSCO, and Evergreen were the first carriers to announce similar moves and in some cases formally declare “force majeure,” a legal term which refers to the right to waive contract duties when events beyond a party’s control occur.

MSC said in its customer communication that it “apologizes for the disruption caused by this contingency plan which is required in response to events beyond our control, but which is taken in compliance with the terms of the contract of carriage.”

MSC did not immediately respond to CNBC’s request for comment.

Maersk is the only major carrier to say it will provide transport from diverted ports for customers. 

Maersk was the charter of the Dali, 10,000-container capacity containership that lost control and crashed into the Francis Scott Key Bridge in the early hours of Tuesday.

After the pandemic boom which led to historic profits, ocean carriers have been through a period of financial and operational challenges, with vessel overcapacity, declining earnings, and the Red Sea Houthi attacks and Panama Canal drought leading to costly diversions from major global trade routes.

Logistics companies have been scrambling since the accident to make alternate transport plans and keep up with carrier diversions, and executives told CNBC on Wednesday that the next few days will be critical in the movement of the diverted trade away from the Port of Baltimore.

The Port of Baltimore, the nation’s eleventh-largest port, is No. 1 in the U.S for auto/light truck and agriculture tractor imports and exports, in addition to handling clothing, household goods, construction materials, electronics and appliances, and produce.

Among the unresolved issues, logistics executives have cited ocean carriers not updating their vessel transits fast enough to alert them to the new diverted port so they can plan for their customer’s container pick-up.

Major ports up and down the East Coast, including Savannah, Brunswick, Virginia, Charleston, and New York/New Jersey, as well as the companies providing chassis for rail and truck transport, have told CNBC they have the capacity to ramp up operations to meet the needs of incoming cargo.

In a series of updates, MSC sent a list of 23 vessels arriving to the diverted ports from March 28-April 29. Eight have an unknown diverted port, 11 are headed to the Port of New York/New Jersey; three to Norfolk; and one to Philadelphia.

On Thursday, Transportation Secretary Pete Buttigieg had a meeting with supply chain professionals about the crisis and how to mitigate any congestion. The meeting included ocean carriers CMA CGM, Maersk, MSC, Evergreen, and railroads CSX and Norfolk Southern. The Port of New York/New Jersey, Georgia, Baltimore, Philadelphia, Jacksonville, South Carolina and Virginia were also in attendance. Shipping clients at the meeting included John Deere, Stellantis, Home Depot, Under Armour, and Volkswagen.

“We are much better equipped to mitigate supply chain disruptions than we were just a few years ago, thanks to increased coordination across the supply chain and new efforts to strengthen both our physical and digital infrastructure,” Buttigieg said, according to a readout from the meeting.

National Economic Advisor Lael Brainard, who was also in attendance, noted that in previous disruptions, the lack of complete information across different components of the private sector and the public sector hampered the decision-making capabilities and responses. She cited the recent DOT FLOW initiative as a difference maker. “It has already been activated to bring the full capacity of all the agencies in the federal government to make sure that we’re helping ocean carriers, port leaders, railroads, shippers, and unions to all come together to assess potential supply chain impacts and then work together to address them.”  

Paul Brashier, vice president of drayage and intermodal at ITS Logistics, said the greatest challenges may be experienced by smaller companies that coordinate the bookings themselves and may not have relationships at these diverted ports. “You want to get your diverted container out of the port as soon as possible so you don’t incur any detention and demurrage fees. For some of these shippers they are starting from scratch,” Brashier said.

Once a container arrives at a terminal, the clock begins ticking on the free time allocated to a container. Once that free time expires, detention and demurrage fees start unless ports agree to waive them.

“We are looking to see if terminals will either give an extension of free time or waive the fees,” Brashier told CNBC on Wednesday. “That’s the rub right now.”

Wholesale prices accelerated at a faster than expected pace in February, another reminder that inflation remains a troublesome issue for the U.S. economy.

The producer price index, which measures pipeline costs for raw, intermediate and finished goods, jumped 0.6% on the month, the Labor Department’s Bureau of Labor Statistics reported Thursday. That was higher than the 0.3% forecast from Dow Jones and comes after a 0.3% increase in January.

Excluding food and energy, core PPI accelerated by 0.3%, compared to the estimate for a 0.2% increase. Another measure that also excludes trade services increased 0.4%, compared to the 0.6% gain in January.

On a year-over-year basis, the headline index increased 1.6%, the biggest move since September 2023.

A busy morning for economic data also showed that retail sales rebounded, up 0.6% on the month according to Commerce Department data that is adjusted seasonally but not for inflation. The increase helped reverse a downwardly revised 1.1% slump in January but was still below the estimate for a 0.8% increase.

Also, initial filings for unemployment insurance nudged lower to 209,000 last week, a decrease of 1,000 and below the estimate for 218,000, the Labor Department reported.

The market focused on the PPI release, which comes two days after the consumer price index, which measures what consumers pay in the marketplace, showed that inflation was slightly higher than anticipated on a year-over-year basis.

PPI is considered a leading indicator for inflation as it indicates costs early in the supply chain.

The BLS reported that about two-thirds of the rise in headline PPI came from a 1.2% surge in goods prices, the biggest increase since August 2023. As with CPI, the acceleration was traced to energy prices, with saw a 4.4% increase in the final demand measure. Gasoline prices jumped 6.8% at the wholesale level.

Services costs increased 0.3%, boosted by a 3.8% surge in traveler accommodation services.

On the retail sales side, the data indicated that consumers kept ahead of CPI inflation, which increased 0.4% on the month, though sales were still sluggish.

Excluding auto, retail sales rose 0.3%, one-tenth of a percentage point below expectations. Motor vehicle parts and dealers saw an increase of 1.6%, second only to the 2.2% gain for building material and garden centers on the month.

Despite slumping prices, gasoline stations reported an increase of 0.9%. Electronics and appliance sales rose 1.5% while miscellaneous store sales increased 0.6% and restaurants and bars were up 0.4%.

Retail sales posted a 1.5% gain on a year-over-year basis, below the 3.2% increase in the CPI.

This is breaking news. Please check back here for updates.

Inflation rose again in February, keeping the Federal Reserve on course to wait at least until the summer before starting to lower interest rates.

The consumer price index, a broad measure of goods and services costs, increased 0.4% for the month and 3.2% from a year ago, the Labor Department’s Bureau of Labor Statistics reported Tuesday. The monthly gain was in line with expectations, but the annual rate was slightly ahead of the 3.1% forecast from the Dow Jones consensus.

Excluding volatile food and energy prices, the core CPI rose 0.4% on the month and was up 3.8% on the year. Both were one-tenth of a percentage point higher than forecast.

While the 12-month pace is off the inflation peak in mid-2022, it remains well above the Fed’s 2% goal as the central bank approaches its two-day policy meeting in a week.

A 2.3% increase in energy costs helped boost the headline inflation number. Food costs were flat on the month, while shelter rose another 0.4%.

The BLS reported that the increases in energy and shelter amounted to more than 60% of the total gain. Gasoline jumped 3.8% on the month while owners’ equivalent rent, a hypothetical gauge of what homeowners could get renting their properties, rose 0.4%.

“Inflation continues to churn above 3%, and once again shelter costs were the main villain. With home prices expected to rise this year and rents falling only slowly, the long-awaited fall in shelter prices isn’t coming to the rescue any time soon,” said Robert Frick, corporate economist at Navy Federal Credit Union. “Reports like January’s and February’s aren’t going to prompt the Fed to lower rates quickly.”

Airline fares posted a 3.6% increase, apparel prices rose 0.6% and used vehicles were up 0.5%. Medical care services, which helped feed a higher-than-expected CPI increase in January, decreased 0.1% last month.

The year-over-year increase for headline CPI was 0.1 percentage point higher than January, while core was one-tenth of a point lower.

Markets showed little initial reaction after the news broke, with futures tied to major stock averages as well as Treasury yields slightly higher.

While the 12-month pace is off the inflation peak in mid-2022, it remains well above the Fed’s 2% goal as the central bank approaches its two-day policy meeting in a week.

Fed officials in recent weeks both have signaled that rate cuts are likely at some point this year and expressed caution about letting up too soon in the battle against high prices. The statement after the January meeting indicated that policymakers need “greater confidence” that inflation is moving back to target.

Chair Jerome Powell, in congressional testimony last week, echoed those concerns, though he did mention that the Fed is probably “not far” from the point where it can start easing up on monetary policy.

Tuesday’s report “leaves Fed officials some way from attaining the ‘greater confidence’ needed to begin cutting interest rates,” said Paul Ashworth, chief North America economist at Capital Economics.

For financial markets, the shift in the Fed stance from its apparent policy pivot in late 2023 has meant a repricing on the pace of rate cuts. Where futures traders entered the year expecting cuts to start coming in March, with six or seven total on the year, they have pushed out the first reduction to June, with three to follow, assuming cuts in quarter percentage point increments.

A bustling economy has helped the Fed focus on incoming data and allowed policymakers to avoid having to rush to lower rates. Gross domestic product expanded at a 2.5% annualized pace in 2023 and is on pace to increase at a 2.5% pace in the first quarter of 2024, according to the Atlanta Fed’s GDPNow tracker.

One key ingredient in that growth has been a resilient consumer boosted by a strong labor market. The economy added another 275,000 nonfarm jobs in February, though the increase skewed heavily to part-time jobs and the unemployment rate rose to 3.9%.

Such strength can be a double-edged sword: While the growth in the face of aggressive rate hikes has bought the Fed time on policy, it also raises concerns that inflation could be more durable than expected.

Housing costs in particular have caused concern.

Shelter comprises about one-third of the CPI weighting and has been slow to decelerate, at least according to the BLS measure. Fed officials see rental prices coming down through the year, and other measures outside the CPI computation of owners-equivalent rent have shown easing price pressures.

Correction: The BLS reported that the increases in energy and shelter amounted to more than 60% of the total gain. An earlier version misstated a sector.

Hedge fund billionaire Ray Dalio attended a Taylor Swift Eras Tour concert in Singapore, and posted a selfie from the packed venue along with a caption explaining why he thought the megastar should be the next president of the United States.

“@TaylorSwift for President!” the Bridgewater Associates founder Dalio wrote Thursday on Instagram.

“I just saw her at her concert in Singapore and realized that she can bring together Americans and people in most countries much better than either of the candidates, and that bringing people together is the most important thing,” Dalio wrote.

“Watching this concert with people from all over the world made me and them feel good and connected and reminded me how powerful that universal culture is,” he added. “Wouldn’t it be great if we had two candidates who could lead that culture and make smart leadership decisions too?”

While the post was likely made in jest, politicians and pundits know all too well of the record-breaking Grammy award winning singer’s powerful influence and enormous fan base.

Dalio later tweeted an update, elaborating on his frame of mind when he made the first post, and explaining it.

“Re: my Taylor Swift for president! comments, no I wasn’t drunk (though obviously I need to work on my selfies) and yes it was a joke, which is a half-truth,” Dalio wrote in the post on the social media site X.

“The half that’s true is that I think she can bring people together a lot better than either of the presidential candidates and bringing people together is one of the most important things a president should do.”

Swift’s get-out-the-vote efforts have previously spurred tens of thousands of young people to register to vote in a single day.

And the reputation she gained supporting Joe Biden’s campaign against former President Donald Trump that year have fostered right-wing conspiracy theories that she’s being deployed as a tool of the Democrats or even the Pentagon and CIA for this year’s presidential race.

While some Republican lawmakers and television pundits suggest Swift is part of a masterminded plot to achieve the Biden administration’s endgame, her fans have replied with “you need to calm down.” Swift has not made any endorsements for the 2024 election, but encouraged her 283 million Instagram followers to vote in a post on Tuesday for the Super Tuesday primaries.

Dalio, who turned Bridgewater into the world’s largest hedge fund, has previously stressed what he believes is the need for a more centrist approach to American politics. Many voters have not expressed happiness at the prospect of a Trump-Biden rematch, bracing for a potentially cruel summer and fall campaign season as the contenders’ bad blood risks stoking further polarization in the country’s politics.

“What we need is a very strong middle,” Dalio said at a financial forum in November.

“We have irreconcilable differences by sides that will not accept losing.”

He said at the time that he saw former U.S. ambassador to the United Nations, Nikki Haley, as the most promising candidate. Perhaps he now hopes Swift will fill in the blank space left by Haley’s recent departure from the race.

The Eras Tour is the most profit-generating concert tour in history, spanning 152 shows in five continents over 21 months.

Since launching her tour, Swift has become a billionaire and boosted the economies of numerous cities and states, surpassing many forecasters’ wildest dreams. The U.S. Federal Reserve in 2023 cited her concerts as providing significant economic boosts to American cities, and some analysts estimated that by October of that year, the shows and subsequent gold rush of travel and spending by fans had added $5.7 billion to the U.S. economy.

In Singapore alone, six consecutive days of concerts are estimated to have added between $225 million to $300 million to the city-state’s economy in the first quarter of this year, according to a survey of economists published by Bloomberg.

Egypt’s pound hit a record low against the dollar on Wednesday after its central bank hiked interest rates by 600 points and devalued the currency.

The steps were meant to facilitate an agreement with the International Monetary Fund, which is expected to confirm the extension of its current $3 billion financial support package for Egypt.

The Egyptian pound was trading at roughly 50 to the dollar following the announcement, from 30.85 previously, according to LSEG data. The country’s key interest rate now stands at 27.25%, the central bank said Wednesday.

The development “shows that policymakers are committed to the turn back toward economic orthodoxy. This is likely to pave the way for an IMF deal within hours,” James Swanston, a Middle East and North Africa economist at London-based Capital Economics, wrote in a research note.

“This appears to be a positive step for Egypt on the path out of its current crisis,” he wrote.

This is a breaking news story, and it is being updated.

Israel’s gross domestic product shrank by nearly 20% in the fourth quarter of 2023, according to official figures.

The contraction was significantly larger than expected — analysts predicted a contraction of around 10% — and reflects the toll of the country’s war against Hamas in Gaza, now entering its fifth month.

The economic data out Monday “pointed primarily to a contraction in private sector consumption and a deep contraction in investment, especially in real estate,” analysts at Goldman Sachs wrote in a research note.

“The deep GDP contraction occurred despite a strong surge in public sector consumption as well as a positive net trade contribution, with the decline in imports outpacing the decline in exports.”

Official figures showed a 26.9% quarter-on-quarter annualized drop in private consumption, and fixed investment plummeting by nearly 68% as residential construction ground to a halt amid a shortage of both Israel workers due to military mobilization and Palestinian workers as the latter group have been mostly barred from entering Israel since Oct. 7.

Before then, more than 150,000 Palestinian workers from the occupied West Bank entered Israel daily for work in a range of sectors, predominantly in construction and agriculture.

Israel’s GDP contraction “was much worse than had been expected and highlights the extent of the hit from the Hamas attacks and the war in Gaza,” Liam Peach, senior emerging markets economist at London-based Capital Economics, said in an analysis note.

“While a recovery looks set to take hold in Q1, GDP growth over 2024 as a whole now looks likely to post one of its weakest rates on record.”

Israel’s high-tech economy is particularly impacted by the fact that it’s mobilized 300,000 of its men and women as military reservists to deploy in both Gaza and on its northern border with Hezbollah in Lebanon.

The mobilization was triggered by the terror attack of Oct. 7 led by Palestinian militant group Hamas that killed roughly 1,200 people in Israel. Israel’s subsequent offensive against the Gaza strip and relentless bombing campaign has killed more than 28,000 people in the blockaded territory, according to Gaza’s Hamas-run health ministry.

A.P. Moller-Maersk, the second-largest global ocean carrier, is advising customers to prepare for a Red Sea crisis that could stretch well into the second half of this year.

“Unfortunately, we don’t see any change in the Red Sea happening anytime soon,” Charles van der Steene, regional president for Maersk North America, tells CNBC. “We’re advising them the longer transit routes could last through Q2 and potentially Q3. Customers will need to make sure they have the longer overall transit time built into their supply chain.”

On January 5, Maersk announced that it was suspending voyages through the Red Sea and Gulf of Aden for the “foreseeable future” after the attack on the Maersk Hangzhou. After attacks on two U.S.-flagged Maersk vessels on January 24, the Maersk Detroit and Maersk Chesapeake, Maersk Line, Limited — a U.S. subsidiary of Maersk, which operates U.S.-flagged vessels independently — announced it would no longer traverse the Red Sea.

The global shipping and logistics company’s cautious view of the Red Sea safety conditions comes despite a U.S.-led multinational military operation in the region, Operation Prosperity Guardian. According to U.S. defense data, Houthi rebels have either attacked or threatened commercial vessels at least 46 times since November. Despite multiple strikes by the U.S. and allies against rebel targets, Houthis have warned that their attacks “will continue until the aggression against Gaza stops.”

The longer transits around the Cape of Good Hope are delaying the arrival of the empty vessels going back to Asia to pick up more U.S. imports. The delays are impacting the consistency of trade which can impact the supply chain. Van der Steene said he is urging U.S. companies to remain vigilant in their assessment of the Red Sea situation and be nimble in their supply chain logistics strategies.

Maersk was the largest ocean carrier for U.S. exports in 2023, based on customs data. Maersk Line, Limited’s U.S.-flagged vessels are enrolled in the Maritime Security Program and VISA (Voluntary Intermodal Sealift) with the U.S. government. It has the largest number of U.S. flagged vessels serving the country, in addition to its foreign-flagged fleet which transports ocean freight for U.S. companies.

“Our advice to our customers is specifically about building upon the uncertainty by being agile,” said van der Steene. “Customers need to have the ability to enter the North American market from different endpoints. Be it the West Coast, Gulf, or the East Coast. Our preparation of services very much depends on one-to-one work with our customers to identify what is their best alternative.”

Data from maritime advisory firm Sea-Intelligence shows that the average delay for late vessel arrivals has “deteriorated,” and as a result, vessel capacity has diminished, with impacts for U.S. East Coast-bound ocean freight from Asia going around the Horn of Cape Hope.

To keep the flow of trade moving, van der Steene told CNBC, Maersk has added about 6 percent of extra vessel capacity to its schedule, adding to operational costs. During its recent earnings call, Maersk executives flagged “high uncertainty” in its 2024 earnings outlook, citing the Red Sea disruptions and an oversupply of shipping vessels.

“U.S. businesses are concerned about delivery timing,” said van der Steene. “Merchant decisions are based on how reliable and how consistent their supply chain will be for the next three, six, 12, 24 months.”

In addition to delivery, van der Steen said shippers need to quantify the cost for their supply chain to the actual costs for their supply chain.

“Many of our customers factor a cost per unit cost for their supply chain into their budgeting, which basically is what they need to make their results work,” he said. “If that fundamentally shifts and changes, it could have a pretty significant effect on their overall costs.”

Ocean freight prices have jumped as a result of the longer voyage, costs not planned in shippers’ budgets, but recent data has suggested that inflation related to the Red Sea may be peaking already. Maersk officials said during its recent earnings call that the situation will not compare to the Covid supply chain inflation period due to the current overcapacity of vessels resulting from a post-Covid freight industry recession.

U.S. companies, van der Steene says, are faced with three supply chain headwinds: Red Sea diversions, East Coast port labor negotiations, and the Panama Canal drought. Shippers are looking for alternatives to cut both the time and rising cost of transit.

Ports in Mexico, the Pacific Northwest, and Los Angeles and Long Beach will be ports receiving some East Coast bound freight, van der Steene said. He described Mexico as a “significant” opportunity due to the expansion of nearshoring of products once manufactured in China. Recent trade data from the U.S. government showed that for the first time in decades, Mexico surpassed China as the nation’s largest trade partner.

For East Coast trade originating from the Oceania (Australia and New Zealand) region and going through the Panama Canal, Maersk recently announced it was expediting freight flow by moving those containers via rail instead of waiting to traverse the canal, which has drought restrictions reducing the number of vessels allowed for daily transit.

“The concern of Panama hasn’t gone away,” said van der Steene. “It has stabilized in the sense that people know what to expect, but we don’t know if this might potentially be recurring on an ongoing basis in the future. As a result, we’re actively looking to potentially have a better West Coast approach that would somehow mitigate the risk of the throughput being reduced on an ongoing basis.”

In January, Turkish inflation logged its biggest monthly jump since August with a 6.7% rise from December, while year-on-year inflation hit nearly 65%, according to the Turkish central bank’s figures released Monday.

The consumer price index for the country of 85 million people increased by 64.86% annually, up slightly from 64.77% in December. Sectors with the largest monthly price rises were health at 17.7%, hotels, cafes and restaurants at 12%, and miscellaneous goods and services at just more than 10%. Clothing and footwear was the only sector showing a monthly price decrease, with -1.61%.

Food, beverages and tobacco, as well as transportation, all increased between roughly 5% and 7% month on month, while housing was up 7.4% since December.

The monthly rises, economists say, stem from a significant increase to the minimum wage that Turkey’s government mandated for 2024. The minimum wage for the year has risen to 17,002 Turkish lira ($556.50) per month, a 100% hike from January 2023.

Turkey’s central bank has been on a prolonged mission to bring down inflation, implementing eight consecutive interest rate hikes since May 2023, for a cumulative 3,650 basis points. The bank’s latest increase, on Jan. 25, raised the key interest rate by 250 basis points to 45%.

The more conventional approach follows several years of unorthodox policy during which Ankara refused to tighten rates despite ballooning inflation. The lira is down 38% against the dollar year to date and has lost more than 80% of its value against the greenback over the last five years. 

The latest inflation print comes just days after Turkey’s central bank governor, Hafize Gaye Erkan, announced her resignation, saying Friday that the decision was due to a “reputation assassination” campaign and the need to protect her family.

Erkan became the bank’s central governor by presidential decree in June 2023, and led — along with Turkish Finance Minister Mehmet Simek — the turnaround in Turkey’s monetary policy and subsequent series of interest rate rises.

She was replaced on Saturday by the central bank’s deputy governor, Fatih Karahan, who spent nearly a decade as an economist at the Federal Reserve Bank of New York.

January’s inflation figures “highlight the continued strength of services inflation and may put pressure on new central bank governor Karaham to restart the central bank’s tightening cycle,” Liam Peach, senior emerging markets economist at London-based Capital Economics, wrote in a research note.

“The fact that inflation didn’t rise significantly more than expected in January is positive given the uncertainty about the impact of the minimum wage hike,” Peach wrote. “But the figures present a small setback to the disinflation process and highlight the continued strength of services inflation. For now, the central bank’s end-year inflation forecast of 36% remains intact.”  

The global economy does not need a “collapse” in order to bring inflation back to target and return to sustainable growth, according to Steven Wieting, chief investment strategist and chief economist at Citi Global Wealth.

Major economies have proven surprisingly resilient to sharp interest rate increases from central banks over the last two years. This has been particularly evident in the U.S., with recession thus far avoided and the labor market remaining robust.

Talk has now turned to rate cuts as inflation remains on a downward trajectory toward central banks’ targets, while growth has slowed.

Wieting told CNBC’s “Squawk Box Europe” on Monday that he is optimistic the global economy does not need an “economic collapse” to rein in inflation.

“We had one massive shock — one pandemic, one collapse. We didn’t need two recessions to ultimately cure our inflation problem,” he said.

“It’s holding down parts of our economy now — manufacturing and trade declines are happening around the world — but these are likely to bottom within the year.”

U.S. headline inflation came in at an annual 3.4% year-on-year in December, remaining above the Federal Reserve’s 2% target but down considerably from a peak of 9.1% in June 2022.

Investors will be closely watching Friday’s personal consumption expenditure (PCE) inflation figure, the Fed’s preferred metric, for further clues as to when the central bank will begin cutting rates.

Meanwhile, a preliminary estimate of fourth-quarter GDP is scheduled for Thursday, with the economy expected to have grown by 1.7%, its lowest rate since the 0.6% decline in the second quarter of 2022.

“This period of slower global growth and slowing employment growth in the United States we think can pass and lead to a healthier growth period if we take a look particularly at the next year and beyond, and that’s this year’s business for investors,” Wieting said.

He highlighted that while there is excess that needs to be worked out of the economy, this was not the result of a “true overheating” or prolonged “boom,” but instead of excess government fiscal stimulus related to the pandemic recovery that wasn’t going to be repeated.

“If you take a look at money supply in the United States, it declined 4% over the past year. Take a look at the 1970s, it was almost 10% growth for the entire decade, important prices surging 14% every single year — that’s … sustained inflation,” Wieting said.

“This story with just all of this government spending coming and going — upheaval in supply and demand, consumer spending going up or down 30% between goods and services, during the pandemic period — that’s not the environment we’re in any longer.”