Here’s the inflation breakdown for March 2024 — in one chart

Inflation jumped in March as prices for consumer staples such as gasoline rose slightly and housing prices remained stubbornly high, suggesting inflation may be a little more persistent than it is. appeared just a few months ago, economists said.

The consumer price index, a key indicator of inflation, rose 3.5% in March from a year ago, the U.S. Labor Department reported Wednesday. This is up from 3.2% in February.

The CPI measures how quickly prices change in the U.S. economy. It measures everything from fruits and vegetables to haircuts, concert tickets and appliances.

The March inflation figure is significantly down from its peak of 9.1% reached during the pandemic in 2022, which was the highest level since 1981. However, it remains above the long-term target term of political decision-makers, or around 2%.

Progress in the fight against inflation has stagnated somewhat in recent months.

“Disinflation has stalled,” said Mark Zandi, chief economist at Moody’s Analytics.

“The big barrier here is the cost of housing,” Zandi said.

Although housing costs have moderated, they account for the largest share of the CPI inflation index and “continue to grow strongly,” he said.

Even though progress has stalled, broader data does not suggest a further surge in inflation – although it could take longer than expected to bring the rate back to target, economists say. In fact, core inflation after housing costs has already returned to target, Zandi said.

“I remain of the view that inflation is moderating,” Zandi said. “It just takes a frustratingly long time to get there.”

Gasoline prices rose 1.7% from February to March, the Bureau of Labor Statistics said. This figure is adjusted to account for seasonal purchasing habits.

Average U.S. pump prices were $3.52 per gallon on April 1, up from $3.35 on March 4, according to weekly data released by the Energy Information Administration.

This increase is largely attributable to the rise in oil prices. They have strengthened against a backdrop of a generally positive outlook for the global economy, resulting in increased global oil demand and controlled production among major oil-producing countries, meaning there is no not had an oil glut, economists said.

Tensions in the Middle East could also play a role, Hamrick said.

Higher gas prices could spill over into higher prices elsewhere because they take into account the costs of transporting and distributing goods and even services such as food delivery, he said.

Rising energy prices are what worries Zandi the most compared to inflation figures. The upward trend is likely to continue in the coming months, and this dynamic will have a negative impact on purchasing power and consumer confidence, he said.

“Nothing causes more damage to the economy faster than rising oil and gasoline prices,” he said.

The BLS said auto insurance, medical care, leisure and personal care, in addition to housing, were “notable” contributors to “core” inflation, a reading that ignores the volatility of energy and food prices.

Housing, auto insurance, medical care, clothing and personal care were notable contributors to monthly inflation from February to March, the agency said.

The overall monthly CPI reading of 0.4% was well above the roughly 0.2% that would be expected on a constant basis to return inflation to normal, economists said.

“There’s no improvement here; we’re going in the wrong direction,” Hamrick said.

“The usual hot spots persist,” said Hamrick, who also cited electricity and car maintenance and repair costs.

At the same time, certain categories of consumers have experienced an improvement.

Prices have fallen for used cars and trucks, new vehicles and plane tickets between February and March for example. They are also down over the past year, by 2.2%, 0.1% and 7.1%, respectively, according to CPI data.

Lower prices for new and used cars should also lead to lower car insurance and repair costs, economists say.

Food prices are another positive, they said.

Although some categories, such as eggs and pork chops, have seen an upward movement recently, the overall “food at home” index stood at 0% on a monthly basis in February and March .

“Food prices are at a standstill,” Zandi said. “For most Americans, what bothers them most about inflation is high food prices.”

At a high level, imbalances between supply and demand cause outsized inflation.

For example, the Covid-19 pandemic has disrupted commodity supply chains. Americans’ shopping habits also simultaneously shifted away from services — such as entertainment and travel — toward physical goods as they stayed home more, driving up demand and fueling a goods inflation that reached decades-long highs.

Additionally, supply and demand dynamics in the labor market have pushed wage growth to its highest level in decades, putting upward pressure on service prices, which are more sensitive to wages.

Now that the supply chain issues are “almost resolved,” there is “little opportunity” for goods to contribute to disinflation in the future, said Sarah House, senior economist at Wells Fargo Economics.

“Services are needed to take on the role of disinflation,” because goods are “disappeared,” she added.

Housing falls into the category of services. It makes up the largest share of the Consumer Price Index, so disinflation in this category would likely have a big impact on inflation figures.

So far, property inflation has remained stubbornly high – although economists predicted it would start to moderate any day given the overall positive trends in rental lease prices for new tenants, for example.

“It seems to be taking a little longer than people thought,” said Andrew Hunter, deputy chief U.S. economist at Capital Economics.

“It happens,” he said. “It’s just a matter of time.”