Inflation in the United States moderated to 5% in the 12 months to March, a better figure than expected by the market, which has brought price rises to their lowest level in two years.
Although the index is far from the objective of the US Federal Reserve (Fed, Central Bank), which seeks a 2% annual increase because it considers it healthy for the economy, the Consumer Price Index (CPI) published on Wednesday by the Department Labor had the lowest variation since the rolling year ended in May 2021.
In February, the increase in 12 months had been 6%. Analysts expected a 5.1% advance in March. In the month-on-month comparison, inflation reached 0.1% versus the 0.2% forecast. In February the increase was 0.4% in relation to January.
“This report shows continued progress in our fight against inflation”, congratulated the US president, Joe Biden, in a statement. It was the fall in energy prices, of 3.5% monthly and 6.4% annually, which moderated the general rise in prices.
“Core” inflation remains high
Core inflation, which excludes volatile items such as food and energy, also eased in a month, to 0.4% from 0.5% in February. But in the annual measurement it remains at the levels of February, at 5.6%, just one percentage point below the second month of the year.
This record assumes that services continue to increase in prices.
The Fed has raised its interest rates nine times in a row in an attempt to make credit more expensive and discourage consumption and investment. A cooling of the economy tends to dilute inflationary pressures.
In March, rents and housing prices continued to rise (0.6% in one month), as did transportation (1.4% in one month).
“There are encouraging signs. (…) But with core inflation remaining high, chances are strong that the Fed will continue to tighten” your reference rates “with a last rise of 25 basis points at its next meeting scheduled for May 2 and 3”said Paul Ashworth, an economist at Capital Economics.
That move would take Fed rates to a range of between 5% and 5.25%.
The fed In any case, it prefers another inflation data, the PCE index, which generally marks a price variation below the CPI.
In February, the measurement was still 5% in a year, compared to 5.3% the previous month.
The March PCE will be released on April 28, just before the next Fed meeting.
Source: Gestion
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