Is this an inflation head-fake or longer lasting problem that the Federal Reserve will need to fight with more rate hikes at some point this year?

The employment cost index, as reported on Tuesday, came in above expectations for the first quarter. A rebound in benefits was a driver in those gains.

Further, March’s consumer price index reading rose 3.5% over the prior 12 months, while the core rate of inflation – which excludes energy and food costs – advanced 3.8% over that period.

The Fed’s preferred measure of inflation, the core personal consumption expenditures price index, grew 2.8% from a year earlier in March. That report also surpassed economists’ expectations.

Coming into 2024, traders in the fed funds futures market expected the Fed to begin cutting rates in March, at one point pricing in a total of six rate cuts over the course of the year.

The recent inflation numbers have reduced the expected number of cuts down to one or two, with the first cut anticipated to arrive much later this year.

Some are also now raising the possibility of a so-called “hawkish pivot” by the Fed, raising the specter of a rate hike this year if this acceleration in the rate of inflation is not “transitory.”

It’s interesting to note that in 2023 there was a summertime CPI spike that seemed to taper off. This led to the broad view that the worst numbers were behind us, and that the Fed would move toward easier policy this year.

Indeed, Fed Chair Jerome Powell previously said he expects rates to start coming down this year.

What he has to say about the most recent mini spike, we will know soon enough. But can the word “transitory” be resurrected with any humility amid these sticky figures?

It’s possible.

Commodity prices, like cocoa, coffee and copper, have been on a tear in 2024.

But some of that is beginning to reverse course, rather notably.

Cocoa prices slid on Monday, a possible indication that a reversal on commodities prices may be on its way.

Despite all the military activity in the Middle East, oil prices have been reasonably well behaved, taking into consideration the energy shocks of years past. The conflict did far less to drive up oil and other energy products than feared.

On Tuesday, oil is down again and sitting below $82. Gasoline futures are lower on the day, as well.

The prospects of a prolonged cease-fire and hostage exchange between Israel and Hamas has kept a lid on prices in recent days.

Precious metals have also been erratic lately. Their role as inflation hedges, as opposed to safe havens, is open to interpretation.

The price of natural gas, though off its most recent lows, remains extremely cheap by historic standards. That decline comes despite rising electricity demand as the result of the artificial intelligence boom and the approach of summer.

In other words, feedstocks are moving lower in price, suggesting that pipeline inflation may well be easing.

A more arcane measure of inflation, the New York Fed’s multivariate core trend reading, a stripped-down measure of underlying inflation pressures, declined in March to a rate of 2.6%. That’s lower compared to the downwardly revised 2.7% in February.

It’s a small victory, but the multivariate reading diverges with the prevailing view.

Shelter and service costs need to noticeably retreat to offer further comfort that the recent pop in the inflation data will come back down.

The Fed is about to hand down a ruling on all this in about 24 hours.

My guess is that Fed Chair Powell pushes the “higher for longer” mantra that pundits and speculators are now betting on.

That will likely lead to a jump in bond yields and potentially derail the rebound seen in stocks over the last several sessions.

I’m not yet willing to fully embrace the view that inflation is stuck at around 3.5% or that the Fed needs to keep rates elevated for an extended period.

The commodity markets are cooling, and esoteric measures of underlying inflation are becoming somewhat more reassuring.

I’m rejoining team transitory until key forward-looking markets tell me otherwise.

It’s a team with an uneven record, to be sure, but my draft card tells me we may be looking forward to a winning season in the months ahead.

 — CNBC contributor Ron Insana is CEO of iFi AI, an artificial intelligence fintech firm.