A shopper takes a carton of eggs from the refrigerator at a grocery store in Washington, D.C., on Saturday, April 6, 2024.
Tom Williams Cq-roll Call, Inc. | Getty Images
The consumer price index accelerated faster than expected in March, pushing inflation higher and the Federal Reserve likely to keep interest rates steady.
The Consumer Price Index, a broad measure of the costs of goods and services across the economy, rose 0.4% during the month, bringing the 12-month inflation rate to 3.5%, or 0.3 percentage points higher than in February, the Department of Labor Statistics' Bureau of Labor Statistics reported. the job. . Wednesday. Economists surveyed by Dow Jones were looking for a gain of 0.3% and a level of 3.4% on an annual basis.
Excluding the volatile food and energy components, core CPI also accelerated 0.4% month-on-month while rising 3.8% from a year ago, compared to estimates of 0.3% and 3.7%, respectively.
Shelter and energy costs led the increase in the index for all items.
Energy rose 1.1% after a 2.3% increase in February, while shelter costs, which make up about a third of the weight in the CPI, rose 0.4% month over month and were up 5.7% from a year ago. Expectations that shelter-related costs will slow over the year have been central to the Fed's thesis that inflation will cool enough to allow interest rate cuts.
Food prices rose just 0.1% month-on-month and rose 2.2% year-on-year. Elsewhere, used car prices fell 1.1% and medical care prices rose 0.6%.
The report comes with markets on the brink and Fed officials expressing caution about the near-term direction of monetary policy. Central bank policymakers have repeatedly called for patience on interest rate cuts, saying they have not seen enough evidence that inflation is on a strong path back to their 2% annual target.
Markets currently expect the Fed to begin cutting interest rates in June with three cuts expected in total this year, according to futures market pricing. Later on Wednesday, the Federal Reserve will release minutes from its March meeting, providing more information about officials' stance on monetary policy.
Stock market futures fell after the report while Treasury yields rose.
The Fed also expects services inflation to decline over the year, but that has shown it is also stubborn. Excluding energy, the services index rose 0.5% in March and was at an annualized rate of 5.4%, which was contrary to the Fed's target.
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