US inflation gauges are expected to show divergent trends before the Iran conflict sent oil prices soaring. The February CPI report Wednesday likely shows core inflation easing to a 0.2% monthly gain, suggesting some cooling in price pressures. Meanwhile, the Fed's preferred PCE price index for January is projected to rise 0.4% for the third straight month, keeping annual inflation at 3%.

These readings capture economic conditions before US and Israeli military operations in Iran triggered a spike in oil prices. With refineries reducing output across the region, gasoline prices have surged at their fastest pace since Hurricane Katrina in 2005. The energy price shock threatens to push overall inflation higher in March, complicating the Federal Reserve's path forward.

Despite inflation remaining above the Fed's 2% target, policymakers are expected to hold rates steady at their March meeting. The central bank enters a blackout period this week, halting public comments on monetary policy. Additional data including January job openings and the University of Michigan consumer sentiment survey will offer fresh insights into how Americans view inflation and the labor market amid heightened geopolitical uncertainty.