Latest #CPI numbers show consumer prices fell 0.1% in March—the...
Sam Williamson@SWilliamsonEcon
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Apr 10, 2025
~1 min read
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Latest #CPI numbers show consumer prices fell 0.1% in March—the first monthly drop since July 2022. Excluding volatile food and energy categories, core prices edged up 0.1% last month. Both indices marked the slowest annual growth rates since inflation began surging in early 2021, with consumer prices rising 2.4% and 2.8% over the past year, respectively. While this is encouraging for the Fed's inflation fight, rate cuts remain unlikely as policymakers wait to see the effects of recent tariff changes reflected in future data.
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Declines in transportation-related costs last month, including gasoline (-6.1%), used cars (-0.7%), and airfares (-5.3%), contributed to last month's softer CPI print. Medical care commodities also fell (-1.1%). Meanwhile, food prices edged up (+0.4%), led by meat (+1.3%) and dairy (+1.0%), along with modest gains in new vehicles (+0.1%) and apparel (+0.4%). These movements in import-reliant categories may reflect anticipatory effects of amid ongoing tariff uncertainty in recent months.
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Some good news for homebuyers: shelter price growth -- one of the largest drivers of headline inflation and a key focus for Fed policymakers -- further slowed in March. Prices rose 0.2% last month, slightly below historical trends. Over the last year, shelter costs increased 4%, still above historical average but steadily declining.
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While today's CPI downside surprise is good news, Fed policymakers will remain cautious cutting rates while the labor market remains resilient and upside inflation risks from tariffs remain. However, recent dips in mortgage rates from recent highs offer homebuyers some modest relief in affordability going into the spring homebuying season.
