WASHINGTON–New Consumer Price Index numbers show inflation slowed notably in March, reflecting the slowest increase in two years.
According to the new data from the Bureau of Labor Statistics, the Consumer Price Index climbed 5 percent in the year through March, down from 6% in February. That marked the slowest pace since May 2021, the data show.
“Consumer prices increased by 0.1% in March and 5% over the last 12 months,” said CUNA Senior Economist Dawit Kebede. “Prices decreased for food, energy, used cars, and medical services. On the other hand, increases in transportation services, new cars, and housing prices offset the decline in other items. The index for housing, a lagging indicator, still continues to contribute the most to the monthly increase but its growth slowed in March. It is expected to slow down even further in the coming months.
“Overall, this is encouraging news for the Federal Reserve fighting to bring inflation down to 2% target,” Kebede continued. “There are some underlying price pressures driven by consumer spending. Core-service prices excluding shelter, which the Federal Reserve watches closely, decreased in recent months but remains at 4%.
“Tight credit conditions after bank failures and high interest rates are expected to slow down spending and result in further cooling down of prices in the coming months,” he added.
Wait, Not So Fast…
Still, other data show inflation remains an issue. The New York Times, for instance, noted that a “so-called core index that aims to get a clearer sense of price trends by stripping out food and fuel costs, both of which can be volatile, picked up by 5.6% from a year earlier. That was up slightly from February’s 5.5% increase, and it marked the first acceleration in the yearly number since September.”
The new data “solidifies the case for the Fed to do another hike in May, and to proceed cautiously from here,” Blerina Uruci, chief U.S. economist at T. Rowe Price, told the Times, adding “it will take time to bring inflation down.”