Inflation in the United States has fallen by a whole percentage point based on the Consumer Price Index, according to a new report from the Bureau of Labor Statistics.
Federal Reserve official announced the decrease of inflation rate in the country. (Photo: CNN)
Inflation Rate in the U.S. Decreased
The CPI, one measure of inflation, decreased from a year-over-year change of 6.0% in February to a year-over-year change of 5.0% in March. This is the lowest inflation rate since May 2021 and is a positive sign for the Federal Reserve, which is trying to get the country back to its target 2% inflation level.
The Fed’s continued interest rate hikes, most recently a 25 basis point increase in March, seem to be working, as the latest economic data shows a cooler month-over-month change in the PCE price index in February compared to January, and year-over-year changes also show this inflation measure has been falling, according to a report published in the Business Insider.
The Fed has been looking for signs of labor market tightening, and it appears to be seeing those as well. The U.S. added 236,000 jobs in March, which is a smaller gain than the months prior, and that slowdown to a still-strong but the not overheated job market is what the central bank has been seeking.
Housing Prices and Apartment Rents Continue to Rise
In a published article in Yahoo News, the overall CPI change for March was positive news, housing prices and apartment rents are still rising at a high rate. Meanwhile, the index for all items except food and energy, or core CPI, saw a slightly higher year-over-year increase in March than in February, fueled in large part by those rising shelter prices.
The Silicon Valley Bank collapse has amplified calls for a pause in interest rate hikes due to the economic uncertainty the debacle prompted. While the Fed isn’t planning on cutting interest rates this year, the latest economic data suggests a pause could be on the horizon. The Fed is getting the data it needs to back a potential pause on interest rate increases, and it’s looking a lot more likely that a severe economic downturn can be avoided.
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