The U.S. Bureau of Labor Statistics said on the 12th (local time) that the CPI rose 5% in March from the same month last year. The CPI increase slowed down, down 1 percentage point from the year-on-year growth rate of 6% in February. This is slightly below the market forecast of the early 5% range. On a month-on-month basis, the CPI rose 0.1% in March from February.
It is the first time since September 2021 (5.4%) that the monthly CPI growth rate in the U.S. has been in the 5% range. It is also the smallest year-on-year increase since May 2021. Analysts say that the U.S. Federal Reserve’s monetary tightening stance is becoming more effective.
Excluding volatile food and energy, the core CPI in March was up 5.6% from the same period last year. The year-on-year core CPI growth rate in February was 5.5%. The initial estimate was 5.1% to 5.22%. Compared to the previous month, the core CPI in March rose 0.4% compared to the core CPI in February.
Although housing rents have increased at the slowest pace since November last year, it is analyzed that they still led the increase in CPI. Used car prices fell slightly in March, but airfare, furniture and auto insurance costs all rose.
The March CPI, released on the same day, is one of the last major announcements ahead of the Fed meeting on the 2nd and 3rd of next month. The Fed’s target inflation rate is 2%. Therefore, after the CPI announcement on the same day, analysts continued that the Fed will continue its interest rate hike next month. CNBC reported, “Inflation is higher than the level at which the Fed can be relieved, but it is showing signs of at least continuing to decline.”
Bloomberg said, “The Fed is likely to raise interest rates at least once again, as the CPI growth rate and the labor market are still strong. “The market is betting that the Fed will raise 0.25 percentage points in May,” it reported. “As fundamental inflationary pressure continues to boil, the Fed is expected to raise interest rates again next month,” Reuters said.
