A shopper removes a carton of eggs from a cooler at a grocery store on Saturday, April 6, 2024, in Washington, DC.
Tom Williams | Cq-roll Call Inc. | Getty Images
Consumer price inflation accelerated faster than expected in March, pushing up inflation and the Federal Reserve likely to keep interest rates on hold.
The Labor Department's Bureau of Labor Statistics reported that the CPI, a broad measure of the cost of goods and services across the economy, rose 0.4% in the month, bringing the 12-month inflation rate to 3.5%, up 0.3 points from February. That's what he said. Wednesday. Economists surveyed by Dow Jones had expected sales to rise 0.3% from a year earlier to a level of 3.4%.
Excluding the volatile food and energy components, core CPI also accelerated 0.4% month-on-month and rose 3.8% year-on-year, compared with estimates of 0.3% and 3.7%, respectively.
Shelter and energy costs drove the rise in all indexes.
Energy prices rose 1.1% following February's 2.3% rise, but housing costs, which account for about one-third of the CPI, rose 0.4% from the previous month and 5.7% from the previous year. did. Central to the Fed's theory that inflation will cool enough to allow it to cut rates is the expectation that shelter-related costs will slow throughout the year.
Food prices rose only 0.1% from the previous month, and 2.2% compared to the same month last year. In addition, used car prices fell by 1.1%, and medical service prices rose by 0.6%.
The report comes as markets remain nervous and Fed officials express caution about the near-term direction of monetary policy. Central bank policymakers have repeatedly called for patience in cutting interest rates, saying they have yet to see enough evidence that inflation is firmly returning to its 2% annual target.
Markets had expected the Fed to begin lowering interest rates in June, with a total of three rate cuts scheduled for this year, but the situation changed dramatically after the announcement, with CME Group calculations showing that traders are now expected to cut interest rates for the first time. The rate cut has been postponed until September.
“There's not a lot from Fed officials that could point to this as a shift away from their hawkish tendencies,” said Liz Ann Saunders, chief investment strategist at Charles Schwab. “For me, June was a mistake. It's completely unexpected,” he said. ”
Stock market futures fell on the news, and U.S. Treasury yields soared.
The Fed is expected to release minutes of its March meeting later Wednesday, providing further insight into officials' positions on monetary policy.
The Fed also expects services inflation to moderate throughout the year, but that too has shown to be stubborn. The services index, which excludes energy, rose 0.5% in March to an annualized rate of 5.4%, out of line with the Fed's target.
This is breaking news.For the latest information, check here.