Declining energy costs fueled the better-than-expected inflation report.
Falling energy prices helped U.S. inflation cool in March, slowing to its lowest level in six months.
According to the Bureau of Labor Statistics, the annual inflation rate declined to 2.4 percent from 2.8 percent in February, the lowest reading since September.
Economists had penciled in a reading of 2.6 percent.
On a monthly basis, the consumer price index (CPI) fell by a better-than-expected 0.1 percent.
Core inflation, which excludes volatile energy and food prices, also eased to 2.8 percent. This is the first time that annual core inflation has been below 3 percent since early 2021.
The core CPI increased by 0.1 percent month over month, below the consensus forecast of 0.3 percent.
A significant contributor to the drop in inflation was the index for energy, which declined by 2.4 percent month over month. This sharp decline was fueled by a 6.3 percent decrease in gasoline prices. However, electricity and utility (piped) gas services increased by 0.9 percent and 3.6 percent, respectively.
Crude oil prices have fallen dramatically this year, sliding more than 16 percent to around $60 a barrel.
While gasoline prices have experienced a recent uptick amid the summertime gasoline transition and refinery maintenance, they remain lower than they were a year ago.
Food prices rose by 0.4 percent from February to March, with supermarket costs climbing by 0.5 percent.
Egg prices rose by 5.9 percent last month and are up by more than 60 percent year over year.
Consumer egg prices remain elevated, but they cratered at the wholesale level. Since peaking above $8 per dozen early last month, egg costs have plummeted to around $3 a dozen, according to the Department of Agriculture.
This sizable drop was caused by declining demand and the U.S. government’s $1 billion five-point plan to stabilize egg markets.
The CPI report revealed renewed progress on the inflation front. New vehicles ticked up by 0.1 percent, but used cars and trucks slipped by 0.7 percent. Apparel rose by 0.4 percent, and transportation services plunged by 1.4 percent.
Shelter, which has driven a large share of CPI increases this year, was little changed in March. Shelter inflation slowed to 4 percent on a 12-month basis.
Supercore inflation excluding housing services—a metric used by the Federal Reserve to monitor inflation—fell by 0.2 percent and slowed to an annual rate of 2.9 percent.
Looking ahead to next month’s CPI report, the headline annual inflation rate and core inflation are seen coming in at 2.5 percent and 3 percent, respectively, according to the Cleveland Federal Reserve Bank’s Inflation Nowcasting Model.
By Andrew Moran
