Inflation Persisted in March

Inflation heated up in March, hurting the Federal Reserve’s case for interest rate cuts in June, reports The Wall Street Journal.

The consumer price index, a measure of price increases across industries, rose 3.5 percent in March compared to the same time last year, above economists’ predictions and higher than February’s 3.2 percent year-over-year increase.

The Bureau of Labor Statistics found that food prices increased by 2.2 percent in March compared to the previous year. This was pushed up by a 4.2 percent spike in food away-from-home prices over the same period. On the other hand, food-at-home prices increased by 1.2 percent compared to the previous year.

Compared to the previous month, the food index increased by 0.1 percent in March, pushed up by meats, poultry, fish, and eggs, but leveled by declines in butter, cereals, and bakery products.

Fed Chair Jerome Powell said that the recent inflation data didn’t change his view of the economy, adding that solid growth and hiring can come even as the labor market winds down and inflation falls back to the central bank’s target of 2 percent.

Powell has signaled that rate cuts are likely this year; however, he also said that officials would need to be confident that inflation is returning sustainably to 2 percent before acting, according to the report.

“We’re in a situation where if we ease too much or too soon, we could see inflation come back, and if we ease too late, we could do unnecessary harm to employment,” Powell said last month. “We do see the risks as two-sided, so it is consequential” to start cutting rates. Full Story (Subscription Required)