Stronger dollar to put downward pressure on US imported goods prices in the near-term

The 0.2% m/m increase in February's consumer prices was enough at least to pull the US out of deflation after only one month, with the annual inflation rate rebounding from -0.1% to 0.0%. 

But there is a good chance that base effects will drive that annual inflation rate back into negative territory for most of the first half of this year.

Capital Economics notes .....

• In the near-term, the stronger dollar will continue to put downward pressure on imported goods prices. But going in the other direction, rising labour costs will put upward pressure on core services prices. 
  
  
• As the dampening effect from the stronger dollar fades in the second half of this year, we would expect to see core inflation gradually strengthen. 
  
  
• By the first half of 2016, we anticipate that it will climb back to the Fed's 2% target, prompting a more aggressive monetary tightening that either Fed officials or the markets currently expect.