Inflation cools, but core CPI remains warm

Investors were watching the inflation print or the Consumer Price Index (CPI) closely with high expectations that inflation is likely to cool further. This report is one of the key data releases ahead of the Fed’s policymaking meeting in May and is likely to decide whether the central bank will continue raising interest rates or pause interest rate hikes. rate.

Economists had forecast a significant deceleration in inflation to an annual rate of 5.2% from the 6% rate in February. On an unadjusted basis, annual inflation rose 5% – the smallest annual increase since May 2021. However, this inflation rate is still above the Fed’s 2% inflation target. Month-to-month inflation rose 0.1% in March from an estimate of 0.3%.

Core CPI, which excludes both food and energy price increases, is seen as a better indicator of future price growth. Core CPI rose 0.4% last month, in line with estimates. On an annual basis, the core CPI rose 5.6%, indicating that inflationary pressures persist.

Rental prices proved more rigid and reflected the continued strength in prices in March, rising 0.5%. The food index was unchanged from February, while the rise in the housing index was the main contributor to the CPI. The cost of housing has increased by 8.2% over the past year. The energy index fell 3.5% last month while on an annual basis it fell 6.4%.

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