The US economy saw a sharp slowdown in inflation in March, with the Consumer Price Index (CPI) declining to 2.4% from 2.8% in February. This trend suggests that President Trump’s trade policies are having an impact on consumer prices.
Economists expect inflation to rise again as global trade tensions escalate and imports become more expensive. The US has imposed tariffs on various countries, which has led to a sharp increase in prices for goods like oil, gas, and airline fares. However, underlying inflation cooled more than expected, driven by lower energy prices.
The slowing of inflation may not be a sustainable indicator of the economy’s trajectory, according to Robert Frick, corporate economist at Navy Federal Credit Union. He warns that costs are likely to increase as the trade war continues. The latest CPI model from EY-Parthenon predicts a 0.8 percentage point rise in inflation this year.
While some sectors like food prices have seen an increase, others like shelter costs and recreation prices have slowed down. However, economists caution that higher prices could lead to a chain reaction of rising unemployment and economic downturns.
The Federal Reserve is closely watching the inflation trend, but it may be put in a difficult position if inflation accelerates and growth stagnates.
Source: https://edition.cnn.com/2025/04/10/economy/us-consumer-price-index-inflation-march/index.html