Economic Trends

March Consumer Inflation Accelerates on Oil Spike; Modest Core Movement

With consumers paying significantly more at the pump, the latest data gives the Fed little reason to enact an interest rate cut at the end of April.

U.S. consumer inflation soared during March as spiked oil prices skewed top line figures, while core inflation trailed expectations.

Data released April 10 by the Labor Department showed that its Consumer Price Index overall figure rose 0.9% month-over-month during March and 3.3% year-over-year, following 0.3% and 2.4% in February, respectively.

The MoM gain was the index’s biggest since June 2022 (1.3%) and the YoY change was its biggest since April 2024.

Meanwhile, core inflation, which removes volatile food and energy categories, increased a modest 0.2% MoM and 2.6% YoY — both 0.1 percentage point below economists’ consensus forecast.

March’s Producer Price Index figures are set to be reported April 14.

Durables Power Healthy February U.S. Wholesale Sales Growth – April 9

Interest Rate Context

While core inflation remained in check during March, the spike in oil prices is causing consumers to pay significantly more at the gas pump and is by far the biggest factor impacting consumer spending broadly. The Fed’s preferred inflation measure — the Personal Consumption Expenditures — jumped 0.4% MoM and 4.5%, with the latter far above the Fed’s long-run target of 2%. It’s certainly possible the PCE index could remain at that level or move higher. Net-net, the latest inflation data figures to give the Fed little reason to enact an interest rate cut during its next Federal Open Markets Committee meeting on April 28-29.