March Inflation Report: Prices Increase More Than Expected

April 10, 2024

June to me is definitely off the table.

Charles Schwab chief investment strategist, Liz Ann Sonders, discussing the higher-than-expected inflation report. The numbers indicate a lesser likelihood of the Federal Reserve cutting interest rates by this summer.

Why It Matters: The Consumer Price Index (CPI) measures a mixed basket of costs of goods and services in the United States, and is used as an important gauge of inflation (high inflation = your dollar buys you less). While the pace of inflation has decreased from its 2022 peak, the annual rate nonetheless continues to be above the federal government’s 2% target, making it less likely for the Federal Reserve to cut interest rates beginning this summer (the government raises borrowing costs to try to slow inflation, and will cut borrowing costs when inflation subsides).

Overall, this report reflected an economy that still runs “too hot” – with inflation higher than desired in many of the key areas of our life. On a monthly basis, increases in shelter (housing) and gasoline costs contributed to more than half of March’s overall increase in inflation. The report reflects prices increasing 0.4% from February to March, and 3.5% over the past year. Core inflation (“core CPI”) – seen as a better data point as the measure strips out volatile energy and food prices – showed that prices increased 3.8% annually, slightly more than expected.

Read More: Consumer prices rose 3.5% from a year ago in March, more than expected (CNBC)

by Emily Hooker, based in Texas