Inflation remains the US economy’s thorniest problem, with March’s consumer price index coming in higher than expected – the third consecutive month of price acceleration. Gasoline prices and rents contributed more than half to the monthly increase, the government announced Wednesday.
In March, prices rose 3.5% on an annual basis, more than the 3.4% expected by economists surveyed by financial data services company FactSet. This also represents a jump from Increase of 3.2% in February and that of January increase of 3.1% on an annual basis.
The latest price acceleration complicates the situation for the Federal Reserve, which monitors economic data to determine whether inflation is moderate enough to allow it to cut interest rates. But inflation, which measures the rate of change in the prices of goods and services purchased by consumers, remained stubborn in 2024, hampering progress made last year in returning the annual growth rate to the 2% target. of the Fed.
“This is the third positive result in a row and means that the stalled disinflationary narrative can no longer be called an incident,” Seema Shah, chief global strategist at Principal Asset Management, said in an email.
Shah added: “In fact, even if inflation were to cool next month to a more comfortable level, there is probably enough caution at the Fed now to mean that a reduction in July could also be an exaggeration, when the US elections will begin. to interfere in the Fed’s decision-making process. »
Stocks fell following the report, with S&P 500 futures down 1% in premarket trading, according to FactSet.
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