US Consumer Price Increases Cool in March but Core Prices Remain Stubbornly High

Consumer prices in the United States rose by 5% in March from a year ago, slowing a full percentage point from 6% in February, and less than the 5.2% increase expected. This month’s report marks the smallest 12-month increase since May 2021, according to the Department of Labor. However, core prices, which exclude volatile food and energy items and capture longer-lasting trends, increased 0.4% from February following a 0.5% bump in the previous month, pushing up the annual increase from 5.5% to 5.6%.[0] Transportation, electricity, food, and shelter were the biggest contributors to last month’s price increases.[1] The latest inflation reading comes three weeks before the Federal Reserve’s next policy meeting, where officials are widely expected to raise interest rates by another quarter percentage point.

The consumer price index for March was 5% higher than a year ago, according to a report from the Labor Department. Since May 2021, there has not been a smaller annual increase than this. The consumer price index overall increased 5% from a year earlier, down from 6% in February and a 40-year high of 9.1% last June, according to the Labor Department’s consumer price index.

With core inflation rising, the report likely bolsters the Fed’s tentative plan to raise its key interest rate by another quarter percentage point in May, capping five points of rate hikes in the past year in an aggressive bid to wrestle down inflation. However, with Silicon Valley Bank’s collapse leading banks to restrict lending, Fed officials have said they’ll probably pause at that point and assess the effects of the crisis on the economy.

According to the Survey of Consumer Expectations conducted by the New York Federal Reserve, the median prediction is that the inflation rate will rise to 4.7% in one year, an increase from 4.2% reported in February.[2] That marks the first increase since October and adds a perplexing twist to the Fed’s campaign to crush price pressures with a series of aggressive rate hikes.[3]

The latest inflation reading comes three weeks before the Federal Reserve’s next policy meeting, where officials are widely expected to raise interest rates by another quarter percentage point.

The data showed that while inflation is still well above where the Fed feels comfortable, it is showing continuing signs of decelerating. Maintaining inflation at approximately 2% is the desired goal for policymakers to promote sustainable and robust economic growth.[4] The CPI’s headline rise was at its lowest since June 2021.

According to a report from the Bureau of Labor Statistics on Wednesday, the rate of inflation in the US, as measured by the Consumer Price Index, has continued to slow down in March compared to the high levels seen last summer. This marks the ninth consecutive month of annual inflation decline.

Overall, consumer price gains cooled last month, though underlying measures continued to show sticky inflation pressure, according to government data released on Wednesday. In March, the consumer price index indicated a greater easing of price pressures than anticipated due to the decline in energy and grocery costs. However, core inflation remained sturdy.[5] Despite core inflation being above the Fed’s target, the recent job market and credit conditions data are timely and compelling enough for policymakers to avoid implementing the final interest rate hike next month.

According to the CPI report, the cost of pre-owned automobiles decreased by 0.9%, whereas the price of new cars increased by 0.4%. The prices of pre-owned vehicles, which played a significant role in the initial rise of inflation in 2021, have dropped by 0.9% in March and are currently 11.2% lower compared to the same period last year. There was a 0.5% drop in the expenses of medical care services in the month.[4]

In conclusion, while US inflation has slowed down, core prices remain stubbornly high, leading to a growing case for the Federal Reserve to raise rates yet again at its next meeting. However, with consumers’ perceptions of credit access and availability declining, and banks restricting lending due to Silicon Valley Bank’s collapse, policymakers may need to pause and assess the effects of the crisis on the economy before implementing another round of aggressive rate hikes.

0. “March CPI rose 5% as core inflation increased 5.6%. Live updates.” USA TODAY, 12 Apr. 2023,

1. “Inflation in March cools to 5%” CBS News, 12 Apr. 2023,

2. “Consumers feel credit is getting harder to come by, Fed survey shows” CNN, 10 Apr. 2023,

3. “US inflation expectations jump for first time in months, NY Fed survey shows” Fox Business, 10 Apr. 2023,

4. “Inflation rises just 0.1% in March and 5% from a year ago as Fed rate hikes take hold” CNBC, 12 Apr. 2023,

5. “CPI Inflation Rate Cools, Lifting S&P 500 Futures; The Fed Would Be Crazy To Hike | Investor’s Business Daily” Investor’s Business Daily, 12 Apr. 2023,