Announced this morning, the headline Consumer Price Index (CPI) decreased -0.1% in March, lower than expected and is three tenth’s lower than last month’s increase. On an annualized basis it grew 2.4%, also less than expected. The core rate, which excludes prices for food and energy, increased just 0.1% in March, also lower than expected and one tenth lower than last month’s increase. It grew 2.8% on an annual basis, less than the previous month.
Looking at the individual categories, monthly prices for Food Away from Home, up 0.5%, and Utility (piped) Gas Service, up 3.6%, were relatively strong while monthly prices for Gasoline, down -6.3%, and Transportation Services, down -1.4%, were relatively weak. Prices for Shelter were up 0.2%, slightly less than last month.
Meanwhile, Initial Jobless Claims were 223,000 for the week ending April 5th which is 4,000 above the previous week’s figure and Continuing Claims were 1,850,000 for the week ending March 29th, less than expected and slightly below the previous week.
Overall, both the headline and core measures for the CPI were less than expected in March. The headline figure decreased when an increase was expected. Core rates increased just slightly in the month and the annualized number declined from the previous month but remains above the Federal Reserve’s target. Food prices increased but were offset by the fall in gasoline prices. Shelter prices rose in March, but at a lower rate than in previous months. The labor market appears stable, per the claims in the low 200k range and continuing claims below the previous week.
It is notable that these CPI figures improved just before the “Liberation Day” tariff announcement occurred, although the annualized core rate was still above the Fed’s targets. Considering tariff levels are likely to continue to change due to ongoing negotiations, how the Federal Reserve chooses to navigate their policy and how companies react in their future guidance in upcoming earnings reports will be key factors to evaluate over the coming weeks.
In all, the 10-year US treasury yield initially ticked lower following the report but is now slightly higher and equity futures are lower following yesterday’s increases as we head into the market open.
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