Core Inflation Drops: Will the Fed Cut Rates or Stay the Course?

Here’s the deal: Inflation took a breather in March. The numbers show the lowest rate since last September. We’re talking 2. 4% year-over-year, according to the latest from the U. S. Bureau of Labor Statistics.

Think of the Consumer Price Index (CPI) as a price tracker. It looks at all sorts of goods and services. And guess what? It dipped by 0. 1% in March compared to February.

What About “Core” Inflation?

Good question. Core inflation takes out the ups and downs of food and energy prices. That number came in at 2. 8% year-over-year in March. The slowest pace since March 2021!

As one expert put it, this is the kind of news the Fed likes to see. Especially when it comes to things like housing and transportation.

But Hold On. .. Will the Fed Actually Cut Rates?

That’s the million-dollar question. Even with lower inflation, don’t expect any quick moves at the next meeting. Tariffs are still a factor.

One economist expects the Fed to stay cautious. They’ll be watching the data closely.

Tariffs: A Potential Problem?

Potentially. Higher tariffs could push inflation back up later this year. One prediction has core CPI inflation climbing to 3. 5% to 4% by year’s end.

The expert thinks the Fed will eventually cut rates. But a delayed response could make things worse. Maybe three rate cuts in the second half of the year?

What Went Down (and Up) in March?

Gas prices fell, a whole 6. 3%. Fuel oil also dropped, down 4. 2%. But natural gas prices went up. Electricity costs too. And clothing? More expensive.

Housing costs saw a small increase. Transportation costs actually went down.

Food Prices: The Egg Effect

Overall, food prices rose. Eggs? Up almost 6%! Meat, poultry, and fish also contributed to the increase.