- Overall
inflation soared 8.5% in the year through March, but other data hint at more encouraging trends. - Core inflation, which excludes food and energy, slowed its monthly growth from February to March.
The March
Data published Tuesday morning showed inflation running at an extraordinary year-over-year pace of 8.5% in March, marking the fastest rate since December 1981 and a hefty acceleration from the 7.9% pace seen the month prior. The Russia-Ukraine conflict powered much of the uptick as the war and related sanctions drove prices for food and energy sharply higher.
The
The data underscores the financial pain Americans continue to face as the rest of the
Yet looking closer at the March
The gauge rose 6.5% year-over-year in March and 0.3% through March alone, both prints landing below economist forecasts. The month-over-month reading also slowed from February's 0.5% gain, marking a second straight deceleration and bringing core inflation closer to the pace seen before the pandemic.
Core CPI is often regarded as a better measure of long-term inflation trends, as it isn't swayed by sudden and temporary changes in food and energy costs. While the latest data could point to lower inflation down the road, future reports will be key to determining whether the cooldown is a one-off or a new trend, Ian Shepherdson, chief economist at Pantheon Macroeconomics, said in a Tuesday note.
"This report is encouraging, at the margin, though it is far too soon to be sure that the next few core prints will be as low," he added.
Other parts of the CPI report suggest overall inflation is at least slowing its roll. Owners-equivalent rent, which tracks changes in housing costs for homeowners, rose by 0.4% in March, echoing February's gain and holding at fairly reserved levels. The segment is viewed as a key indicator for whether inflation is moving permanently higher, and the lack of such a sharp upward trend suggests price growth can still cool somewhat quickly.
Used car and truck prices, meanwhile, fell 3.8% between February and March, marking the largest one-month drop since 1969. The category was one of the biggest drivers of overall inflation last year, even counting for a third of overall price growth in some months. Should the coming months see similar declines, that will remove a major source of inflation from the headline CPI measure.
And while it didn't show up in the March print, oil prices have already fallen from last month's peak, and gas prices have pulled back from record highs.
West Texas Intermediate crude — the US's oil-price benchmark — has fallen nearly 23% since hitting its early-March high, with much of the decline spurred by President Joe Biden's announcement of a massive oil release from the US's reserves. Prices remain elevated, but the trend seen through April is all but guaranteed to lead to a weaker month-over-month reading for energy prices in the next inflation report.
The country is still far from putting the inflation problem behind it. But while headline inflation gauges point to intensifying pain throughout the economy, other factors suggest the worst could soon be behind the US.