Prices on goods excluding energy and food rose 5.6% year-over-year in March, according to the latest Bureau of Labor Statistics (BLS) inflation report released on Tuesday.
The Consumer Price Index (CPI), a broad measure of the prices of everyday goods, rose 5% on an annual basis in March, which was the lowest increase in two years. However, core CPI prices — which excludes energy and food — remain elevated. According to the BLS report, core CPI rose 5.6% year-over-year in March, driven primarily by a rise in shelter costs.
On an annual basis, shelter costs increased 8.1%, due in large part to increasing rents and the index for owners equivalent rent, which both rose 0.5% in March. These price increases followed larger increases the previous month, according to the BLS. The index for lodging away from home increased 2.7% in March as well.
“Headline inflation cooled in March, but it’s not time to celebrate just yet,” John Leer, Morning Consult chief economist, told Fox Business. “Topline inflation was driven lower primarily by falling energy prices, which tend to be volatile from month to month. Core inflation remains sticker and more persistent.”
Among the other indexes that rose in March was the index for motor vehicle insurance, which increased 1.2%, and the index for airline fares increased 4%. The indexes for household furnishings and operations, new vehicles, education and apparel also increased according to the BLS.
Despite the decreasing rate of headline inflation, inflation remains about three times higher than the pre-pandemic average, according to Fox Business. These increased prices highlight the financial burden still being placed on millions of American households due to higher prices, and amplify the challenges the Federal Reserve will confront at their next policy-setting meeting in May.
The Fed has already increased interest rates nine times in the past year to cool inflation. “It’s not going to move the needle for the Fed,” Steve Blitz, chief U.S. economist at TS Lombard, told The Wall Street Journal. “The inflation problem doesn’t get solved by itself—it needs higher unemployment to get there.”
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