But the data does not include the impact of new tariffs. Stocks were down big on Thursday morning.
Inflation rates plummeted in March according to the latest Consumer Price Index (CPI) from the Bureau of Labor Statistics.
The CPI inflation rate fell to 2.4% in March, down from 2.8% in February. It was below the 2.6% median estimate among economists. The 2.4% inflation rate is the lowest since last September.
For the month, the inflation rate actually decreased, falling 0.1%. That is down from 0.2% growth in February and is below the 0.1% increase that economists had anticipated. It marks the first time since May 2020 that the month-over-month inflation rate has dropped.
Core CPI, which excludes food and energy prices, dropped to 2.8%, year-over-year. That is down from 3.1% in February and better than the 3.0% core CPI that economists projected. It is also the lowest the core CiPI has been since March 2021. For the month, the core CPI rose 0.1%, down from 0.2% in February and below median estimates of 0.2%.
The biggest drop in March was in energy prices, which fell 2.4% for the month. Within energy, gas prices dropped 6.3% in the month while fuel oil fell 4.2%. This offset a 0.9% jump in electricity and a 3.6% increase in utility gas service.
In addition, food prices rose 0.4% for the month, up from 0.2% the previous month. Within this sector, food at home prices rose 0.5% and food away from home prices increased 0.4%. Food prices are up 3.0% year-over-year.
Within food at home, four of the six major grocery store food group indexes increased, led by egg prices, which rose 5.9% in the month. Egg prices are up 60% year-over-year. The index for meats, poultry, fish, and eggs rose 1.3 percent in March. Also, the beef index increased 1.2%, while fruits and vegetables declined 0.5% and cereals and bakery products rose 0.1%.
In food away from home, the price of full-service meals rose 0.6%, while the cost of limited-service meals increased 0.2%.
The index for food at home rose 2.4% over the last 12 months while food away from home prices are up 3.8% year-over-year.
Stocks fall Thursday morning
Overall, indexes that increased over the month include personal care, medical care, education, apparel, and new vehicles. The indexes for airline fares, motor vehicle insurance, used cars and trucks, and recreation were among the major indexes that decreased in March.
It should be noted that March does not include the impact of the new 10% tariffs that were imposed on U.S. trading partners on April 2.
“Tariff-induced price hikes should meaningfully materialize in the data starting with next month’s report and reverberate for several months afterwards,” Vanguard economists said in their recent outlook.
The inflation data will be closely scrutinized by the Federal Reserve as it considers interest rates at its upcoming meeting in May. About 79% of interest rate traders expect rates to stay the same in May, which is roughly the same percentage as before the CPI came out.
Stocks were down significantly Thursday, with the Dow down more than 900 points, the S&P 500 of 150 points, and the Nasdaq dropping by more than 600 points.
