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US Consumer Price Index (CPI) data reveals that inflation has decreased more than anticipated

US CPI data released on Wednesday, 12 April 2023

The US Consumer Price Index (CPI) data for March was released by the Bureau of Labor Statistics today. The annual inflation rate rose by 5%, and there was a 0.1% month-on-month price increase. The all items index increased by 5% over the 12 months leading up to March, which was the smallest 12-month increase since May 2021. The all items index, excluding food and energy, rose by 5.6% over the last year. Meanwhile, the energy index decreased by 6.4% over the 12 months ending in March, while the food index increased by 8.5% during the same period. These figures indicate that inflation is in line with expectations. The drop in the overall CPI from 6% to 5% was primarily driven by lower energy and gasoline prices.


The US core Consumer Price Index (CPI), which excludes food and energy, increased by 0.4% in March, following a 0.5% rise in February. Meanwhile, the overall CPI rose by 0.1%, as energy prices decreased.


As a result, these figures suggest that a Fed rate hike remains a possibility. The persistently high annual US inflation rate could prompt the US Fed to continue raising interest rates, but the recent SVB banking crisis and its impact on the financial stability of several regional banks have created pressure on the US Fed to exercise caution. The Federal Reserve is now in a favorable position to raise interest rates by 25 basis points and may consider a strategic pause at its June meeting.

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