The Consumer Price Index (CPI) report for March showed that inflation slowed faster than expected across several measures. Headline CPI rose only 0.1% month-over-month (the slowest pace since December) which represents a 5.0% year-over-year rate—the lowest since May 2021. Core CPI rose 0.4% month-over-month and 5.6% year-over-year, driven by services and shelter costs. Despite these improvements, inflation still remains well-above the Federal Reserve’s (Fed) policy target, and upward inflation pressures persist within core services, which is now being closely watched by the Fed. This reinforces the expectation for another rate hike in May, followed by a likely pause, with a higher-for- longer policy thereafter.
Core Consumer Price Index
Year-over-year % change, 1960–present