The United States announced on Wednesday (12th) that the March consumer price index (CPI) increased by 5% year-on-year, lower than market expectations of 5.2% and the previous value of 6%, a new low since May 2021; core CPI excluding food and energy costs The annual increase of 5.6% was in line with market expectations, but slightly higher than the previous value of 5.5%. While data showed a steady cooling in U.S. inflation, core inflation still pointed to tenacity.
On a monthly basis, March CPI grew by 0.1%, lower than market expectations of 0.2%, and a sharp drop from the previous value of 0.4%. Core CPI grew by 0.4%, in line with market expectations, but slightly lower than the previous value of 0.5%.
Observing the details of the index, the US Department of Labor stated that the housing index is still the largest contributor to the growth of all projects every month, completely offsetting the decline in the energy index.
The energy index fell 3.5% in March as all major energy components declined. The food index was unchanged from March, and the household food index fell 0.3%. In the past 12 months to March, the energy index fell 6.4%, and the food energy index increased 8.5% over the same period last year.
Separately, indexes that rose in March included housing, motor vehicle insurance, air tickets, home improvement and operations, and new vehicles. Both the health insurance index and the used cars and trucks index fell for the month.
Goods inflation picked up on an annual basis in March, rising to 1.5% from 1.0%, while services inflation eased slightly to 7.1% from 7.3%. The “super core inflation” preferred by the Fed: The annual growth rate of the core service CPI excluding housing slowed to 5.73%, the lowest since July 2022.
The CPI report was basically in line with analysts’ expectations, providing a sign of future deflation, but the core CPI rose again to prove the tenacity of inflation.
The analysis pointed out that although policymakers are closely watching whether the latest banking turmoil will affect the economy, the strong rise in CPI combined with a still strong labor market may prompt the Federal Reserve (Fed) to raise interest rates at least once more, after which they The pause in rate hikes will be extended.
expert opinion
Derek Tang, an analyst at LH Meyer/Monetary Policy Analytics, said the Fed should be leaning toward a rate hike in May, but that does cast doubt on whether another hike is needed in June.
Bloomberg economists Jonathan Church and Stuart Paul believe that this summer, it is expected that there will be strong measures to curb inflation. Even so, the Federal Open Market Committee (FOMC) is expected to raise interest rates again when it meets next month1 yards (25 basis points).
