Inflation Moderates Notably in March
The pace of U.S. consumer price increases continued to ease in March, with the cost of goods and services cooling for the ninth consecutive month and hitting the lowest point in 22 months. Still, consumer price increases are at multi-decade highs, as a strong labor market and resilient consumer spending have continued to fuel economic growth. The Consumer Price Index (CPI) for All Urban Consumers, a measure of price changes commonly referred to as the inflation rate, was up 5% on an annual basis in March 2023, according to the Bureau of Labor Statistics. That was slightly below economists’ expectations. It was also down from the 6% annual increase in February and well below the 9.1% hike last June, which was the biggest year-over-year jump in prices since November 1981. Still, inflation has been above the Fed’s 2% target for two years. Excluding volatile food and energy prices, the core CPI increased 5.6% during the year-ending March. Looking at other indexes, the cost of food increased 8.5% over the past year. Shelter, which accounts for about one-third of the total CPI index, saw an 8.2% year-over-year price surge in March, the biggest annual gain in over 40 years. And new vehicles posted a 6.1% price increase over the past year. Meanwhile, price increases in airline fares (+17.7%) and eggs (36%) remain stubbornly high. Contributing to the lower inflation rate, the cost of energy dropped 6.4% year-over-year in March, with the cost of gasoline (-17.4%) having a big impact on that decline. The price of used cars and trucks (-11.2%) were also down on an annual basis.