US inflation slowed to a 5 percent annual rate in March, the lowest level in nearly two years. This marked the ninth straight month of declining annual inflation, providing a sign of relief for families and businesses hard-hit by soaring prices. Wall Street closely monitored the inflation data as it was the last major data point before the Federal Reserve meets again on April 27-28.
The probability that the Fed will maintain current rates at its next meeting rose to 33 percent with a 67 percent probability that rates will rise another quarter point. Higher rates can counteract inflation but may also slow down economic growth, raising recession risks and impacting stock prices and other investments adversely.
U.S. consumer inflation experienced an easing during March due to less expensive gas and lower food prices providing some relief to households struggling under surging costs for almost two years now. Prices increased just by 0.1% from February to March; this is down from a previous increase of 0.4% between January and February.
However, excluding volatile food and energy costs, core inflation remains stubbornly high. The International Monetary Fund (IMF) warned that persistently high global inflation combined with central banks' efforts would likely slow worldwide growth this year into next year.
The government's latest data release showed consumer price gains cooling off last month while underlying measures continued demonstrating sticky pressure on overall inflation levels: "CPI increase, year over year was at 5%; consensus estimate among economists surveyed by [the Journal] predicted a figure around 5.1%. Core CPI increase (excluding food & energy prices), year over year reached approximately at about $0 - \text{m}$
According to recent reports released by both Bureau Labor Statistics (BLS) Department Consumer-price index report shows headline inflating numbers rising only moderately faster pace since May 2021 - up just slightly better than economist forecasts but still significantly above Federal Reserve's original target.
The data follows recent job reports indicating a slowdown in hiring last month. This deceleration is not expected to be enough for the Fed to pause its aggressive rate-hiking campaign, with markets predicting around a 70% chance that rates will rise by another 0.25% in May.