Inflation Stays High but Headline CPI Rose Less than Expected

Highlights

• March CPI rose 0.1%, lower than predicted
• YoY headline inflation was 5.0%, in line with forecast
• Core CPI increased 0.4% and YoY core inflation was 5.6%, higher than target

Overview

The CPI, which measures the average change in prices of goods and services purchased by households, rose 0.1% in March, which was lower than the predicted 0.2% rise.

However, year-on-year headline inflation was 5.0%, which was higher than the Fed’s 2% target and the same as forecasted. The core CPI, which excludes volatile food and energy prices, increased by 0.4%, matching economists’ expectations, and the year-on-year core inflation rate was 5.6%, higher than both the Fed’s target and forecast.

The report showed that the index for shelter was the main contributor to the increase, while the energy index declined.

Overall, the March CPI data was mixed, with the monthly increase being lower than expected, but year-on-year inflation remaining high. The core CPI data showed an increase in prices, which could impact the Fed’s inflation strategy and interest rate hikes.

US CPI Shows Unchanged Food Index in March

The food index was unchanged in March, with the food at home index falling 0.3%, mainly due to lower prices of meats, poultry, fish, and eggs, as well as fruits and vegetables.

The food away from home index rose 0.6% due to increased prices of full and limited service meals.

The energy index fell 3.5%, driven by a decline in gasoline and natural gas prices, while the all items index, excluding food and energy, rose 0.4%, primarily due to an increase in the shelter index.

The medical care index fell 0.3%, while the indexes for motor vehicle insurance, household furnishings and operations, new vehicles, education, and apparel increased.

Over the past 12 months, the food index and energy index have increased 8.4% and decreased 6.4%, respectively, while the all items index, excluding food and energy, has increased 5.6%.

The report showed that the indexes for rent, owners’ equivalent rent, motor vehicle insurance, and household furnishings and operations had notable increases over the last year.