Policy- Inflation, as measured by the consumer price index, ticked up again in March.
- The CPI rose 3.5% from March 2023 to this past March after rising 3.2% year over year in February.
US inflation is hot again.
A Wednesday news release from the Bureau of Labor Statistics said the consumer price index increased 3.5% for the 12 months ending in March. The forecast for March's year-over-year increase in the CPI was 3.4%, a higher rate than the 3.2% increase or the 3.1% increase in February or January, respectively.
The rate came in above the forecast and was higher than February's year-over-year change.
The recent acceleration in the year-over-year percent change isn't just painful on its own for Americans. It also means they likely won't see interest rate cuts soon.
The Federal Open Market Committee will be meeting April 30 and May 1, where a rate cut announcement is very unlikely. Based on the CME FedWatch tool, markets expect there's around a 98% that rates will hold.
And some market watchers also think the Fed may hold off on its widely-anticipated cuts at its next meeting in June.
"While the Fed officially targets the PCE measure of inflation, which is not showing the same degree of stickiness as the CPI data, the weight of evidence from this report (and other high-frequency data) likely now tips the scale away from a June cut," Richard de Chazal, macro analyst for William Blair, said in a note.
CPI increased 0.4% in March from the preceding month — the same as the 0.4% surge in February. That's also comparable to the forecast of 0.3%.
Core CPI, which excludes volatile food and energy prices, increased 3.8% year over year in March. That's above the forecast of 3.7% and the same as February's 3.8%.
Core CPI also rose by 0.4% again. The expected increase was 0.3%.
"The index for shelter rose in March, as did the index for gasoline," the news release from the BLS published on Wednesday said. "Combined, these two indexes contributed over half of the monthly increase in the index for all items."
The shelter index rose 0.4% again from the preceding month. This index saw a 5.7% rise year over year in March, matching the 5.7% year-over-year increase in February.
Rent of primary residence increased 5.7% year over year, and owners' equivalent rent of primary residence rose 5.9% year over year. Shelter contributed to the bulk of the overall increase in prices over the year.
Energy saw a smaller month-over-month increase in March, with a 1.1% increase from February to March compared with the 2.3% increase in February. Energy didn't see another year-over-year decline. It actually rose 2.1% after February's year-over-year decline of 1.9%.
The gas index rose 1.7% month over month after a 3.8% increase. This index climbed 1.3% for the 12 months ending March after a drop of 3.9% for the 12 months ending February.
Food saw a 0.1% increase month over month, and this index saw a 2.2% increase year over year. The index for food away from home is high compared with food at home. Food away from home had a year-over-year increase of 4.2% compared with food at home's 1.2% rise.
Julia Pollak, the chief economist at ZipRecruiter, told Business Insider the jobs report released on Friday was "the Fed's holy grail: strong job market with non-inflationary growth."
The US added 303,000 jobs in March, a robust gain after the strong 270,000 gain in February. Pollak said the increases in both job growth and the workweek, along with the drop in the unemployment rate, were "all good signs about the enduring strength of the labor market and its dynamism." She also noted the slower wage growth, which she said was "good news for a Fed that's still battling inflation."
Average hourly earnings increased 4.1% year over year to $34.69 an hour in March, which fell short of the 4.3% year-over-year increase in February.