US Core CPI Rises Firmly While Showing Some Hints of Moderating

 Inflation cooled in March as the Federal Reserve’s interest rate increases showed more impact, the Labor Department reported Wednesday.

The consumer price index, a widely followed measure of the costs for goods and services in the U.S. economy, rose 0.1% for the month against a Dow Jones estimate of 0.2%, and 5% from a year ago vs. the estimate of 5.1%.

Excluding food and energy, core CPI increased 0.4% and 5.6% on an annual basis, both as expected.

The data showed that while inflation is still well above where the Fed feels comfortable, it is at least showing continuing signs of decelerating. Policymakers target inflation around 2% as a healthy and sustainable growth level.

A key measure of US inflation remained brisk but showed hints of moderating in March, giving the Federal Reserve room to pause interest-rate hikes following one more anticipated increase next month.

Excluding food and energy, the consumer price index rose 0.4% last month after a 0.5% increase in February, according to data out Wednesday from the Bureau of Labor Statistics. The overall measure edged up 0.1%, reflecting a pullback in gasoline and natural gas prices.

From a year ago, the so-called core CPI, which economists view as the better indicator of underlying inflation, was up 5.6%. It’s the first time in over two years that core came in above the overall measure, which was up 5%.

That’s a sharp slowdown from the previous month because the figure is now compared with March 2022, when energy prices spiked immediately after Russia’s invasion of Ukraine.

The median estimate in a Bloomberg survey of economists called for a 0.4% monthly advance in the core gauge and a 0.2% gain in the overall measure.

Follow the reaction in real-time here on Bloomberg’s TOPLive blog

The report highlights the sticky nature of inflation — particularly within the service sector — while still offering some glimpses of disinflation ahead. While policymakers are closely watching for any sign that the latest banking turmoil is weighing on the economy, brisk consumer price gains paired with a still-strong labor market are likely to lead the Fed to raise interest rates at least once more before what they say will be an extended pause.

Treasury yields tumbled and the S&P 500 index futures rose and the dollar extended losses on the day. Traders still largely bet on a 25 basis-point rate hike at the Fed’s May meeting.

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