Inflation report due Tuesday has the potential to deliver some bad news

Just as Federal Reserve officials have grown optimistic that inflation is cooling, news could come countering that narrative.

All market eyes Tuesday will be on the release of the Labor Department’s consumer price index, a widely followed inflation gauge that measures the costs for dozens of goods and services spanning the economy.

The CPI was trending lower as 2022 came to close. But it looks like 2023 will show that inflation was strong — perhaps even stronger than Wall Street expectations.

“We’ve gotten surprises on the soft side for the last three months. It…