(Washington) U.S. inflation slowed to 5% year on year in March, doing better than expected to its lowest level in almost two years, although still far from the target for the Federal Reserve (Fed).
According to the CPI index published on Wednesday by the US Department of Labor, consumer prices are thus slipping to their lowest since May 2021, when they had increased by another 6% in February over twelve months. Analysts expected inflation to pick up another 5.1% in March.
Over one month, inflation came out at 0.1%, against 0.2% forecast, and after 0.4% in February.
It was the drop in energy prices (-3.5% over the month and -6.4% over one year) that contributed to the decline in general inflation.
So-called core inflation, which excludes volatile sectors such as food or energy, also slowed slightly over one month, to 0.4% from 0.5% in February. Over one year, however, it remains high at 5.6%, against 5.5% the month before.
This level is still far from the target of 2% underlying inflation that the American central bank (Fed) wants to achieve, which has raised its interest rates nine times in a row for a year.
In March, rents and housing prices continued to increase sharply (0.6% over one month), as did transport (1.4%).
“ There are encouraging signs […], but with underlying inflation still high, there is a good chance that the Fed will continue its tightening with another last rate hike of 25 basis points during its next monetary meeting”, scheduled for May 2 and 3, commented Paul Ashworth, economist for Capital Economics.
