Consumer prices rose 5% compared to last year in March, slowest since May 2021
Consumer prices rose at their slowest pace since May 2021 as inflation showed further signs of easing in March, according to the latest Bureau of Labor Statistics data released Wednesday morning.
The consumer price index (CPI) revealed that headline inflation rose 0.1% month-on-month and 5.0% year-on-year in March, down from February’s 0.4% month-on-month increase and 6% annual increase.
Both measures were slightly better than economist forecasts for a 0.2% month-on-month increase and 5.1% annual increase, according to data from Bloomberg.
The 5% jump in inflation marks the slowest annual increase in consumer prices since May 2021[ads1], but remains well above the Federal Reserve’s 2% target. The Fed has raised interest rates to try to bring down inflation, but the central bank risks sending the economy into recession by raising interest rates too high too quickly.
On a “core” basis, which strips out the more volatile costs of food and gas, prices in March rose 0.4% from the previous month and 5.6% from a year ago. Both targets were in line with economists’ expectations, according to Bloomberg data.
Core inflation remained particularly sticky last month due to rising rents. The index for house rent and the index for owners’ equivalent rent both rose 0.5% in March after larger increases the previous month. Owners’ equivalent rent is the hypothetical rent a homeowner would pay.
The refuge index increased by 8.2% in the past year, accounting for over 60% of the total increase in core inflation.
US stocks rose in pre-market trading immediately after the release of the data. Treasury yields also rose.
The energy index fell 6.4% for the 12 months ending in March, while the food index rose 8.5% over the past year. The energy index fell 0.9% from February to March, led by a 4% drop in the price of fuel oil. Gas prices rose 1% compared to the previous month in March, but fell 17.4% from the same month last year.
Food costs saw some reprieve in March with the food index unchanged while the food at home index fell 0.3%, the BLS noted. Egg prices fell 10.9% in March.
This is a breaking story. More to come.
Alexandra Canal is a senior reporter at Yahoo Finance. Follow her on Twitter @alliecanal8193 and email her at alexandra.canal@yahoofinance.com
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