The Consumer Price Index (CPI) rose 2.4 percent year-on-year in March, down from the previous month and below economists’ expectations. On a monthly basis, inflation fell by 0.1 percent, aided by a 6.3 percent decline in gasoline prices and a 2.4 percent drop in the broader energy index.
The figures offer a temporary reprieve for the Trump administration, which has faced criticism over the potential inflationary effects of its aggressive trade measures. Last week, Trump announced tariffs of up to 50 percent on selected imports, triggering sharp movements in financial markets. However, the administration rolled back most of the levies on Wednesday, sparing all countries except China.
While the latest inflation data predates the implementation of the tariffs, it provides a snapshot of consumer price trends ahead of possible economic disruption. Baseline tariffs now stand at 10 percent, with higher duties targeted at specific Chinese goods.
“The immediate tariff threat has been delayed, and inflation concerns have eased for now,” said Chris Zaccarelli, Chief Investment Officer at Northlight Asset Management. “This is encouraging news for the Federal Reserve, which is weighing potential rate cuts if the economy suffers from escalating trade tensions.”
Core inflation, which excludes volatile food and energy prices, edged up by 0.1 percent month-on-month and 2.8 percent year-on-year — the smallest annual increase since March 2021. The data came in below median forecasts from economists surveyed by Dow Jones and the Wall Street Journal.
Despite inflation moderating, the Federal Reserve remains cautious. Price pressures continue to hover above the Fed’s long-term 2 percent target, while the U.S. unemployment rate remains near record lows. Analysts say the central bank is likely to hold rates steady at its upcoming policy meeting in May unless trade-related shocks significantly weigh on growth and employment.
According to data from CME Group, markets are currently pricing in an 80 percent probability that the Fed will keep rates unchanged next month.
