Washington (AP) – American inflation decreased last month while the cost of gas, airline tariffs and hotel rooms dropped, a sign that prices growth was cooling when President Donald Trump increased his pricing.
Consumer prices increased by 2.4% in March compared to the previous year, the Department of Labor said Thursday, compared to 2.8% in February. This is the lowest inflation figure since September.
Excluding the volatile categories of food and energy, the basic prices increased by 2.8% compared to a year ago, against 3.1% in February. It is the lowest increase in basic prices in almost four years. Economists closely look at basic prices because they are considered a better guide to inflation management.
However, economists have warned that the data was mainly back and likely to be exceeded by the impact of the prices that Trump left in place, in particular Huge tasks on ChinaEven after 90 -day break from certain prices Announced Wednesday. Inflation should start to resume in two to three months and perhaps remain high at least at the end of this year.
“We have obtained a huge increase in prices,” said Paul Donovan, chief economist for UBS Wealth Management. “There was an increase in the extreme price for less than 24 hours, and we are back to a huge increase in the price, compared to the place where we were a month ago. This increases taxes on American consumers. And they will have to find the money to pay these taxes. ”
On a monthly basis, prices actually dropped by 0.1% in March, the first monthly drop of almost five years. Basic prices only increased by 0.1% in March from February.
“It was good, but don’t get used to it,” said Greg McBride, chief financial analyst of Bankrate. “All of this is looking in the rear view mirror. With inflation and the global economy, uncertainty abounds on what could be hidden in the turn. ”
Used car prices fell 0.7% from February to March, the government said. The cost of automotive insurance dropped by 0.8%, welcome and car owners, although insurance costs are still 7.5% increased against a year ago.
One of the reasons why prices have dropped was a clear drop in travel costs, including air prices, which slipped 5.3% from February to March. The prices of hotel rooms dropped by 3.5%. Economists said these decreases partially reflected a much slower international demand because the number of tourists visiting the United States fell in the middle of Trump’s aggressive commercial policy.
Visits to the United States abroad fell almost 12% last month, according to government data.
The cost of the grocery store, however, jumped 0.5% last month, according to the report, because egg prices left 5.9% for a new average record price of $ 6.23 per dozen. Clothing prices increased by 0.4%, although they have increased little in the past year.
Trump had imposed radical prices at nearly 60 nations last weekwho sent financial markets in a tailpin And caused a clear drop in commercial feelings and consumers. However, Wednesday, he stopped these tasks for 90 days. The White House initially said a 125% price It would remain on all imports from China, later specifying that the price is 145% when an increase of 20% for fentanyl prices is included. And 25% of duties on steel, aluminum, imported cars and many goods from China and Mexico also remain in place.
The remaining rates are always likely to raise inflation this year, say economists, even with the 90 -day break.
Even with the break, many companies are always uncertain where commercial policy will then go. Trump has also said that pharmaceutical imports will be imposed.
Consumers will probably see certain prices increase due to existing tasks, including massive prices on China. The United States imports more than $ 60 billion in iphones and other mobile phones from China every year, as well as massive amounts of clothing, shoes and toys.
Many American companies will likely withdraw the production of China, a process that had already started during Trump’s first term when he slapped some of his exports. However, China remains the third trading partner in the United States.
The displacement of China’s supply chains will probably take time and come with its own costs, which could increase prices for American consumers in the coming months.
Last week, the president of the federal reserve Jerome Powell said that the central bank was likely to maintain its key interest rate unchanged at around 4.3% while waiting to see how Trump policies had an impact on the economy. Trump called on the Fed to reduce rates on Friday.
“There is a lot of expectations and seeing taking place, including us,” said Powell. “And it seems to be the right thing to do in this period of uncertainty.”
