Data: Bureau of Labor Statistics; Chart: Axios Visuals
Inflation was notably cooler than expected in March: The overall Consumer Price Index dropped as energy prices plummeted, while the core measure that excludes food and energy rose just slightly.
Why it matters: Inflation moved down as President Trump began ratcheting up the global trade war last month — a relief after warnings that inflation progress had stalled out.
- But concerns about inflation remain: Trump’s 10% across-the-board tariff that took effect this month could hit consumer prices, as well as the higher levy of 125% on imports from China.
By the numbers: CPI dropped 0.1% in March — the coolest monthly reading since July 2022.
- In the 12 months through March, CPI rose 2.4%, a big pullback from February’s 2.8% increase.
- Core CPI — which policymakers see as a better representation of underlying inflation — rose just 0.1% last month, while the measure rose 2.8% in the year ending in March, compared to the 3.1% in February.
The big picture: Trump reversed course on Wednesday on a set of reciprocal tariffs on imports from Europe, Japan and other allies. But a global trade war is still underway, keeping warnings about inflationary pressures in play.
The bottom line: The data will be welcomed by the Federal Reserve.
- But officials are likely to remain on high alert: anecdotes suggest shaky economic growth, and there is a potential for a tariff-driven pick-up in price increases in the months ahead.
