Investing.com -- The latest U.S. data offers a clearer picture of the economy, but rising oil prices now pose the biggest risk to the inflation outlook, Barclays analyst Jonathan Miller acknowledged in a note to clients on Monday.

Miller wrote that recent estimates “helped resolve many tensions in our outlook,” with February’s jobs data “effectively reversing January's upside surprises” while consumer spending shows resilience even as growth slows.

Barclays still expects “two 25bp cuts, in June and December,” but warned that oil remains a major wildcard.

“The Iran situation remains fluid,” the bank said, with risks “mostly centered upon oil market developments.”

“A persistent 10% increase in oil prices boosts headline inflation by 0.2pp in one to two months,” Miller wrote.

Because of recent moves, the bank has lifted its forecast for December 2026 CPI by 0.4 percentage points to 2.7% year over year, with risks skewed higher should the conflict drag on.

On the labour side, Barclays downplayed the weakness in February’s jobs report. While nonfarm payrolls fell by 92,000 and the unemployment rate rose to 4.4%, Barclays argued this “largely reflects a reversal of idiosyncrasies that had boosted the January report.” It also noted the impact of a strike sidelining 31,000 healthcare workers.

Barclays also said the data still points to job gains averaging roughly 50k per month and a labour market where even modest hiring pushes down the unemployment rate.

Incoming spending data also indicates stability. Retail control group sales rose 0.3 percent in February, and vehicle sales rebounded, both “consistent with the gradual deceleration of consumer spending” in the bank’s outlook.