The consumer price index increased 3.5% in March—higher than expected—driving inflation higher and likely putting the anticipate interest rate cuts from the Federal Reserve on pause this year. Higher costs were propelled by the lofty prices for gas, housing, car repairs and other services and goods.
Car repairs topped the index in March, with an 8.2% year-over-year increase. Other price hikes were seen in hospital services (7.5%), housing (5.7%), restaurants (4.2%), gas (1.3%) and groceries (1.2%).
The cost of core items, outside the fluctuating food and energy categories, was up 0.4% and 3.8% 3.8% from February and the same time last year, respectively. March’s CPI reading marks the third consecutive month of inflation measurements above the target rate of 2%. Because Fed officials have expressed that they’re not in a rush to cut interest rates, these numbers diminish the chance it will occur this year.
The reading “pours cold water on the view that the faster readings in January and February simply represented the start of new-year price increases that were not likely to persist,” said Kathy Bostjancic, chief economist at Nationwide, in a research note. “The lack of moderation in inflation will undermine Fed officials’ confidence that inflation is on a sustainable course back to 2% and likely delays rate cuts to September at the earliest and could push off rate reductions to next year.”
