Inflation Hits Six-Month Low in March
Consumer prices saw a decline of 0.1% in March from the previous month, reversing the 0.2% rise reported in February, according to new figures from the Bureau of Labor Statistics released Thursday.
CNN highlighted that this is the first monthly decrease in prices since May 2020, potentially signaling an economic shift under President Donald Trump’s leadership.
The BLS also noted that its all-items index rose 2.4% over the past 12 months through March, down from a 2.8% increase recorded in the year ending in February.
“Wall Street had been looking for headline inflation of 2.6% and core at 3%, according to the Dow Jones consensus,” CNBC reported.
Energy prices played a significant role in keeping inflation in check, with gasoline prices plunging by 6.3%. This drop contributed to a 2.4% overall decline in the energy index. Meanwhile, food costs edged up 0.4% for the month. Eggs saw a notable spike, increasing 5.9% in March and soaring 60.4% year-over-year.
Shelter prices—usually among the most persistent inflation drivers—only rose 0.2% last month and were up 4% annually, marking the lowest yearly gain since November 2021. Used car prices declined by 0.7%, and new vehicle prices posted a marginal 0.1% rise, all preceding the anticipated impact of new auto tariffs.
Other price changes included a 5.3% drop in airline fares, a 0.8% decline in motor vehicle insurance, and a 2% reduction in prescription drug prices. Following the inflation data release, stock futures pointed to a weaker start on Wall Street, and Treasury yields dipped into negative territory, according to CNBC.
This inflation report came just a day after President Trump unexpectedly shifted his tariff approach—postponing some of the tougher tariffs affecting numerous countries while maintaining a 10% universal tariff on all imports. He also initiated a 90-day negotiation period for potential changes to the new duties.
While Trump entered office promising to curb inflation, early 2025 progress has been limited. Still, the president has urged the Federal Reserve to reduce interest rates.
Federal Reserve officials, however, have expressed hesitancy, citing ongoing policy uncertainty. Current market sentiment suggests the Fed may wait until June before making any decisions on rate reductions.
Although many economists predicted the new tariffs would spur a sharp rise in inflation, that outlook has softened now that Trump has allowed room for negotiation.
“Today’s softer-than-expected CPI release feels backward-looking, given the large changes to trade policy seen in recent days,” said Kay Haigh, global co-head of fixed income and liquidity solutions at Goldman Sachs Asset Management, according to the outlet. “Going forward, the Fed is likely to face a difficult trade-off as tariff-driven price increases start to feed through to the inflation data and activity remains soft.”
As CNBC also noted: “Futures market pricing after the CPI report indicated little change in market expectations for interest rates, with traders pricing in three or four cuts by the end of the year.”
Since President Trump took office, inflation has either cooled or declined.
In late February, the U.S. Bureau of Economic Analysis published its Personal Consumption Expenditure (PCE) Index, a key gauge of inflation, showing just a modest 0.3% increase as Trump began focusing on economic reform.
Because inflation tends to rise over time, economists emphasize the rate of increase rather than whether it increases at all. The newest data has matched expert forecasts, according to The Center Square.
The PCE index rose 2.5% from a year earlier—or 2.6% when excluding volatile food and energy costs. While a sharper slowdown had been hoped for, inflation is currently far below the surging rates seen during the Biden era.