U.S. consumer prices barely rose in March as the cost of gasoline declined, but stubbornly high rents kept underlying inflation pressures simmering, likely ensuring that the Federal Reserve will raise interest rates again next month. Nevertheless, the mixed report from the Labor Department on Wednesday offered some encouragement in the fight against inflation. Services inflation showed signs of moderating. Rents, though still high, rose at their slowest pace in nearly a year.
Food prices were unchanged, the weakest reading since November 2020, with households getting relief on some products at the supermarket. "The bottom line is that inflation still remains too hot for the Fed's liking," said Sarah House, a senior economist at Wells Fargo in Charlotte, North Carolina. "That said, there are forward-looking signs that suggest inflation will slow further in the coming months."
The Consumer Price Index (CPI) climbed 0.1% last month after advancing 0.4% in February. A 4.6% decline in gasoline prices was offset by higher rental costs. Gasoline prices are set to rebound after Saudi Arabia and other OPEC+ oil producers early this month announced further oil output cuts.
The annual CPI peaked at 9.1% in June, which was the biggest increase since November 1981, and is subsiding as last year's initial surge in energy prices following Russia's invasion of Ukraine drops out of the calculation.