Inflation Report to Show Whether Price Pressures Eased Again in March
A report for March will show whether consumers got additional relief from high inflation as the Federal Reserve continued its campaign to slow rapid price increases.
The Labor Department’s consumer-price index, a closely watched inflation gauge that measures what consumers pay for goods and services, rose 6% in February from a year earlier. That was the smallest increase since September 2021 and down from a 6.4% gain during the prior month. Households saw higher prices for food and shelter and lower prices for energy, used autos and medical-care services.
Inflation remains elevated—well above the 2.1% average in the three years before the pandemic and the Fed’s 2% target.
Core prices, which exclude volatile energy and food categories, have eased more slowly than overall prices, in part because of inflationary pressures from shelter costs. Core prices, which economists see as a better predictor of future inflation, rose 5.5% in February, down slightly from 5.6% during the prior month.
The CPI report is scheduled for release on Wednesday at 8:30 a.m. Eastern time.
Economists surveyed by The Wall Street Journal estimated that overall prices rose 5.1% in March from a year earlier and that core prices increased 5.6% during the same period. They estimated that overall prices increased 0.2% in March from the prior month and that core prices climbed 0.4% in the same period.
“It’s not going to move the needle for the Fed,” said Steve Blitz, chief U.S. economist at TS Lombard. “The inflation problem doesn’t get solved by itself—it needs higher unemployment to get there.”
The Fed has raised interest rates nine times over the past year to cool the economy and tame inflation, which shot up as the economy rebounded from the pandemic during supply-chain disruptions and labor shortages.
Fed officials in March raised the benchmark federal-funds rate by a quarter-percentage point, bringing it to a range between 4.75% and 5%. They signaled that banking-system stress might end the rate-increase campaign sooner than previously thought. The Fed is due to meet during the first week of May to consider its next interest-rate move.
Tighter lending following two recent midsize bank failures will slow U.S. economic growth this year, the International Monetary Fund estimated Tuesday. The economy started the year on a surprisingly strong note, but it has shown recent signs of slowing. Mr. Blitz and many other economists expect the U.S. to slip into a recession later this year.
The labor market cooled some in March, with hiring gains moderating and wage growth easing. Weekly jobless claims, a proxy for layoffs, are up from historic lows. And job openings have dropped—a signal that demand for workers is easing. Consumer spending, the primary driver of growth, rose more modestly in February.
Meanwhile, elevated inflation is weighing on household spending decisions.
Matt LeRoy and his wife, Melanie, cut back on after-school care for their 6-year-old son, and they are driving to visit family for spring break instead of renting an Airbnb in the Poconos. Mr. LeRoy said they saved all of his annual bonus this year, rather than spending part of it on a home-improvement project or purchasing a three-burner gas grill he was looking at.
Matt LeRoy with his son Grayson in Connecticut.
Photo:
Melanie LeRoy
“We got our deck redone last year, and more than anything I wanted a nice, new grill. But we already have one. And, sure, it’s 10 years old, but it does its job,” said Mr. LeRoy, a senior manager at a healthcare tech company in Simsbury, Conn. “That’s where our heads are at right now—being savvy savers and making sure we’re thinking about the long term.”
The clogging of the supply chain, an early driver of the inflation surge, has abated. Shipping rates from China to the West Coast have dropped close to prepandemic levels after soaring in 2021.
David Cuevas, co-owner of Digital Wardogs, an e-commerce company that sells products through
Amazon.com Inc.,
said that the profit margin is bigger on his business’s main product—shoe-spike attachments for aerating lawns—because of the drop in shipping rates, but that inflation is eating into overall sales as consumers spend more on essential items and travel.
“They’re having to spend more at the grocery store, so you’re not seeing as many of them buying products,” Mr. Cuevas said. “Being able to take a trip rather than buying some object off Amazon is what I’m doing—and I think what a bunch of other people are doing as well.”
Prices for goods have been rising more slowly, a process called disinflation, but that has largely run its course, said Bernard Yaros, an economist at Moody’s. “At least in the near term, a lot of the benefit we’ve gotten from healing supply chains has played out, and we can’t necessarily expect that to be a major source of disinflation going forward,” he said.
Other price pressures have eased over the past year. The national average price of a gallon of regular unleaded gasoline was $3.61 on Tuesday, down from last June’s record of $5.02 a gallon, according to OPIS, an energy-data and analytics provider that is part of
News Corp’s
Dow Jones, publisher of The Wall Street Journal. Economists expect shelter-price gains—a major factor driving core inflation—to moderate in coming months.
Write to Gwynn Guilford at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
A report for March will show whether consumers got additional relief from high inflation as the Federal Reserve continued its campaign to slow rapid price increases.
The Labor Department’s consumer-price index, a closely watched inflation gauge that measures what consumers pay for goods and services, rose 6% in February from a year earlier. That was the smallest increase since September 2021 and down from a 6.4% gain during the prior month. Households saw higher prices for food and shelter and lower prices for energy, used autos and medical-care services.
Inflation remains elevated—well above the 2.1% average in the three years before the pandemic and the Fed’s 2% target.
Core prices, which exclude volatile energy and food categories, have eased more slowly than overall prices, in part because of inflationary pressures from shelter costs. Core prices, which economists see as a better predictor of future inflation, rose 5.5% in February, down slightly from 5.6% during the prior month.
The CPI report is scheduled for release on Wednesday at 8:30 a.m. Eastern time.
Economists surveyed by The Wall Street Journal estimated that overall prices rose 5.1% in March from a year earlier and that core prices increased 5.6% during the same period. They estimated that overall prices increased 0.2% in March from the prior month and that core prices climbed 0.4% in the same period.
“It’s not going to move the needle for the Fed,” said Steve Blitz, chief U.S. economist at TS Lombard. “The inflation problem doesn’t get solved by itself—it needs higher unemployment to get there.”
The Fed has raised interest rates nine times over the past year to cool the economy and tame inflation, which shot up as the economy rebounded from the pandemic during supply-chain disruptions and labor shortages.
Fed officials in March raised the benchmark federal-funds rate by a quarter-percentage point, bringing it to a range between 4.75% and 5%. They signaled that banking-system stress might end the rate-increase campaign sooner than previously thought. The Fed is due to meet during the first week of May to consider its next interest-rate move.
Tighter lending following two recent midsize bank failures will slow U.S. economic growth this year, the International Monetary Fund estimated Tuesday. The economy started the year on a surprisingly strong note, but it has shown recent signs of slowing. Mr. Blitz and many other economists expect the U.S. to slip into a recession later this year.
The labor market cooled some in March, with hiring gains moderating and wage growth easing. Weekly jobless claims, a proxy for layoffs, are up from historic lows. And job openings have dropped—a signal that demand for workers is easing. Consumer spending, the primary driver of growth, rose more modestly in February.
Meanwhile, elevated inflation is weighing on household spending decisions.
Matt LeRoy and his wife, Melanie, cut back on after-school care for their 6-year-old son, and they are driving to visit family for spring break instead of renting an Airbnb in the Poconos. Mr. LeRoy said they saved all of his annual bonus this year, rather than spending part of it on a home-improvement project or purchasing a three-burner gas grill he was looking at.
Matt LeRoy with his son Grayson in Connecticut.
Photo:
Melanie LeRoy
“We got our deck redone last year, and more than anything I wanted a nice, new grill. But we already have one. And, sure, it’s 10 years old, but it does its job,” said Mr. LeRoy, a senior manager at a healthcare tech company in Simsbury, Conn. “That’s where our heads are at right now—being savvy savers and making sure we’re thinking about the long term.”
The clogging of the supply chain, an early driver of the inflation surge, has abated. Shipping rates from China to the West Coast have dropped close to prepandemic levels after soaring in 2021.
David Cuevas, co-owner of Digital Wardogs, an e-commerce company that sells products through
Amazon.com Inc.,
said that the profit margin is bigger on his business’s main product—shoe-spike attachments for aerating lawns—because of the drop in shipping rates, but that inflation is eating into overall sales as consumers spend more on essential items and travel.
“They’re having to spend more at the grocery store, so you’re not seeing as many of them buying products,” Mr. Cuevas said. “Being able to take a trip rather than buying some object off Amazon is what I’m doing—and I think what a bunch of other people are doing as well.”
Prices for goods have been rising more slowly, a process called disinflation, but that has largely run its course, said Bernard Yaros, an economist at Moody’s. “At least in the near term, a lot of the benefit we’ve gotten from healing supply chains has played out, and we can’t necessarily expect that to be a major source of disinflation going forward,” he said.
Other price pressures have eased over the past year. The national average price of a gallon of regular unleaded gasoline was $3.61 on Tuesday, down from last June’s record of $5.02 a gallon, according to OPIS, an energy-data and analytics provider that is part of
News Corp’s
Dow Jones, publisher of The Wall Street Journal. Economists expect shelter-price gains—a major factor driving core inflation—to moderate in coming months.
Write to Gwynn Guilford at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
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