The consumer price index in the United States fell more than expected in March, ahead of President Donald Trump's new tariffs on the country's major trading partners.
The consumer price index, a measure of the cost of goods and services in the US economy, fell by 0.1% on a seasonally adjusted basis, the US Bureau of Labor Statistics said on Thursday. This brought the annual inflation rate down to 2.4%, from 2.8% in February.
Excluding food and energy, core inflation rose just 0.1% in the month, bringing the annual rate to 2.8%, the lowest since March 2021. Falling energy prices, particularly gasoline which fell 6.3%, were the main drivers of the slowdown in overall inflation. However, food prices rose 0.4%, with egg prices jumping 5.9% in just one month, now recording an annual increase of more than 60%.
Residential rents, which have remained high, rose just 0.2% in March and 4% annually, the smallest increase since November 2021. Used vehicle prices fell 0.7%, while new vehicles rose just 0.1%, ahead of the impact of tariffs that are expected to put significant pressure on the auto industry. Airfares also fell 5.3%, auto insurance fell 0.8%, and prescription drug prices fell 2%.
However, the US stock market reacted negatively to the report, with Wall Street futures opening much lower, while Treasury yields also fell.
The report came just a day after Trump’s surprise announcement that he would delay some of the highest planned tariffs. Instead, he maintained the 10% tax on all imports announced last week, and opened a 90-day negotiation period before more aggressive tariff action was implemented.
Although Trump campaigned on promises to reduce inflation, progress in that direction has been slow throughout early 2025.
