Turning our focus back to the economy, there is no conceivable way the Fed will hike later today. The CPI is down, as is industrial production, and consumer spending.

CPI fell 0.2% vs a consensus estimate of -0.3%. The Econoday spin is interesting.

The CPI core is showing pressure for a second month, up a higher-than-expected 0.3 percent in February with the year-on-year rate up 1 tenth to plus 2.3 percent and further above the Federal Reserve’s 2 percent line.

Gains are once again led by health care with medical care up 0.5 percent for a second straight month which includes a 0.9 percent gain for prescription drugs. Shelter also shows pressure, up 0.3 percent as does apparel which is up 1.6 percent for a second straight sharp gain. Food rose percent 0.2 percent with the year-on-year rate at plus 0.9 percent.

Energy prices, which may be on the climb this month, fell a sharp 6.0 percent in February and pulled down the total CPI which came in at minus 0.2 percent with the year-on-year rate at plus 1.0 percent.

But it’s not the total that Fed officials will be watching but the core which — for a second straight month — is signaling what policy makers want, that is upward pressure. This report isn’t dramatic enough to revive much chance for a rate hike at today’s FOMC but it will offer strong arguing point for the hawks.

Imaginary Arguing Points

Manufacturing is still broke, the Atlanta Fed GDPNow forecast is back under 2% annualized, and the prices rising most (healthcare and rents) will tend to reduce more important consumer spending. The same applies when gasoline prices rise next month.

This is a case of the Fed wanting price inflation, and finally getting it. Yet “strong arguing points” are imaginary. Price increases in Obamacare and rents will dampen, not spur consumer spending.