Prices go up in March: Key takeaways from the March CPI report

The latest Consumer Price Index report shows prices rose more than expected last month, propelled by the high costs of housing and gasoline.

MIKE SEGAR

Gidget Alikpala

Gidget writes for the latest news section of AS USA, covering breaking news and current affairs. She previously worked for TV for many years, both on and off-camera, as anchor, producer, and writer, reporting on topics from international to lifestyle news. She earned her master’s degree in journalism from the University of Missouri-Columbia.

Update: Apr 10th, 2024 12:03 EDT

The Consumer Price Index, the main gauge for inflation, increased at a higher than expected rate for the month of March. The index went up 0.4% for the month after rising by the same margin in February, and climbed 3.5% over the last 12 months.

The Bureau of Labor Statistics reports that the cost of gas and housing- which includes rents- comprised more than 50% of the rise. The steep cost of shelter continues to be a main roadblock to bringing inflation rates down.

Cost of shelter refuses to cool down

Expectations that housing costs will cool down have been the basis of the Federal Reserve’s belief that inflation will reach a lower level that will permit interest rate cuts.

Both the all-index and core CPI, which discounts volatile food and energy costs, went up by 0.1 percentage point more than expected at 0.4%. Economists had projected a 0.3% hike and a 3.3% year-over-year figure. It is the third straight month that core CPI registered 0.4% numbers.

An economist from the Bureau of Labor Statistics corresponded on data related to CPI with major Wall Street firms like JPMorgan and BlackRock, raising questions about equitable access to economic information. https://t.co/iHGDs3KflL
— Bloomberg (@business) April 9, 2024

June rate cut looks more unlikely

The high CPI statistics make it more unlikely that the Federal Reserve will begin cutting rates in June, although a rate cut for the year has not yet been ruled out.

Central bank officials have said in the past that they have not yet been convinced inflation is on its way to the Fed’s target of 2%. The latest CPI report is evidence that prices are stubbornly remaining high.

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The January and February data could have been viewed as seasonal increases, but now that March has shown a hike as well, the Fed has to reconsider the pattern.

Stock index futures tumbled after the release of the CPI report, while Treasury yields surged. The dollar index also went up.