Consumer Price Index (CPI) data released on Wednesday revealed that inflation cooled again in March. In fact, consumer prices rose at the slowest pace since May 2021.
According to the CPI, headline inflation rose 0.1% over last month and 5.0% over the prior year in March, a slowdown from February’s 0.4% month-over-month increase and 6% annual gain.
Both measures were slightly better than the Dow Jones estimate of a 0.2% month-over-month increase and a 5.1% annual increase.
Excluding food and energy, core CPI increased 0.4% and 5.6% on an annual basis, both as expected.
The 5% jump in inflation marks the slowest annual increase in consumer prices since May 2021. However, it is still significantly above the Federal Reserve’s 2% target as a healthy and sustainable growth level. The headline increase for CPI was the smallest since June 2021.
At the open of the stock market this morning, the S&P 500 added 0.6%, while the Dow Jones Industrial Average gained 0.5%. The technology-heavy Nasdaq Composite jumped 0.8%.
Investors will continue to digest this morning’s CPI report, as it could provide some clues into whether the Fed will continue to raise rates at its next meeting. According to data from the CME Group, markets have priced in a 68% probability that the central bank will raise interest rates by another 0.25% in May.
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