The consumer price index (CPI) fell 0.1% in March, the first decline since October, the Bureau of Labor Statistics said on Thursday, April 10. Prices climbed 2.4% from March 2024, the slowest annual increase since early 2021.
Wall Street was bracing for a hotter inflation report. The Dow Jones consensus estimated headline inflation to be 2.6% and core inflation to be 3%, CNBC reported.
Gas prices fell 6.3% in March, helping drag the energy index down 2.4%. The drop more than offset rising costs for electricity and natural gas.
Food prices, however, continued climbing. According to the BLS, March saw a 1.3% increase for meats, poultry, fish, and eggs.
Grocery prices as a whole rose 0.5% in March, also driven by a 5.9% surge in egg prices – which are up 60.4% from one year ago. Dining out also got more expensive, with restaurant prices rising 0.4%.
The BLS data doesn’t factor in the volatile global economic conditions in April, sparked by Trump’s “liberation day” tariffs. On Wednesday, April 2, Trump announced sweeping tariffs of at least 10% on about 185 countries, with escalating rates even higher on dozens of nations.
After Trump’s tariff reveal, Wall Street saw four days of massive losses, including the two worst trading days since early in the COVID-19 pandemic. The fallout from the widespread tariffs removed about $6.6 trillion from US equity markets in the two days after the announcement.
Trump retreated from many of his tariffs on Wednesday, April 9, when he announced a 90-day pause on some duties for more than 75 countries that haven’t issued retaliatory tariffs.
Trump also escalated his tariff on Chinese goods to 145% after China raised its retaliatory tariff on the US to 84%. The White House has clarified that Trump’s 125% Chinese tariff is in addition to his pre-existing 20% tariff.
The tariff pause sent markets soaring, but the historic gains may be short-lived. When Wall Street began trading on April 10, the Dow Jones Industrial Average opened down more than 611 points, the S&P 500 fell more than 103 points, and the Nasdaq Composite dropped nearly 500 points.
While Trump campaigned on immediately bringing down inflation, progress has been slow in early 2025. Federal Reserve officials remain cautious about cutting interest rates with so much policy uncertainty from the Trump administration.
Market pricing suggests the Fed will wait until June before cutting rates.
“Today’s softer-than-expected CPI release feels backward-looking, given the large changes to trade policy seen in recent days,” Goldman Sachs executive Kay Haigh told CNBC. “Going forward, the Fed is likely to face a difficult trade-off as tariff-driven price increases start to feed through to the inflation data and activity remains soft.”
Real average hourly earnings – wages adjusted for inflation – rose 0.3% from February to March. Weekly earnings also increased by 0.3%, and real hourly earnings have grown 1.4% over the past year.
The next CPI report is expected to be released on Tuesday, May 13.
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