U.S. Inflation Falls to 2.4% in March, Lower Than Expected
Consumer prices eased in March, offering a bit of relief to policymakers and households alike, as the annual inflation rate dipped to 2.4%, according to new data from the Bureau of Labor Statistics. This marks a notable decline from February’s 2.8% and reflects slower price growth across several key sectors.
Monthly Prices Show Slight Decline
On a seasonally adjusted basis, the consumer price index (CPI) fell 0.1% in March. This modest monthly drop, driven largely by lower energy prices, helped push the overall 12-month price rate below economists’ forecasts.
Core inflation, which strips out volatile food and energy prices, also increased by just 0.1% on the month. On a yearly basis, core inflation landed at 2.8%, its lowest level since March 2021.
Energy Prices Lead the Decline
Gasoline prices plunged 6.3%, contributing to a broader 2.4% drop in the energy index. This significant decline was a key factor in keeping March’s inflation rate lower.
In contrast, food prices climbed by 0.4%. Egg prices stood out with a 5.9% monthly jump, pushing the annual increase to a staggering 60.4%.
Housing and Vehicle Costs Show Signs of Cooling
Shelter prices, which have been a persistent source of inflation, rose just 0.2% in March. That brings the 12-month increase to 4%, the slowest pace since late 2021.
Used vehicle prices dropped 0.7%, and new car prices rose only 0.1%, just ahead of anticipated tariffs that could impact auto costs later this year.
Travel and Healthcare Costs Drop
Several consumer categories showed notable declines:
- Airline fares: down 5.3%
- Motor vehicle insurance: down 0.8%
- Prescription drugs: down 2%
These decreases may reflect softening demand or policy changes, though future price trends remain uncertain.
Tariff Talk Adds to Market Jitters
The inflation data comes as President Donald Trump prepares to implement a new wave of tariffs. While some duties were delayed this week, a 10% blanket tariff on all imports remains in place, with a 90-day negotiation window for further adjustments.
Markets reacted swiftly to the data and tariff uncertainty. Stock futures pointed to a weaker open, and Treasury yields slipped, reflecting cautious investor sentiment.
A Turning Point for Inflation?
Trump campaigned on taming inflation, but the first months of 2025 brought mixed results. March’s numbers offer a glimmer of progress, especially in core inflation, but persistent food and housing costs continue to challenge overall affordability.
Whether this downward trend continues will depend on several factors—including global supply chains, consumer demand, and the final outcome of the tariff negotiations now underway.
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