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United States Inflation March 2023

United States: Inflation drops to lowest level since April 2021 in March

Inflation dropped to 5.0% in March, following February’s 6.0%. March’s reading represented the weakest inflation rate since April 2021. Looking at the details of the release, a contraction in energy prices and slower growth in food prices were behind the slowdown.

Annual average inflation fell to 7.4% in March (February: 7.7%). Meanwhile, core inflation rose to 5.6% in March, from the previous month’s 5.5%.

Finally, consumer prices increased 0.05% from the previous month in March, which was below the 0.37% increase seen in February. March’s result marked the weakest reading since July 2022.

While both the month-on-month and year-on-year variations in consumer prices undershot market expectations, the uptick in core inflation could concern the Fed; our panelists expect the Central Bank to hike rates this quarter to tame price pressures.

On monetary policy, Desjardins’ Francis Généreux said:

“Core inflation is proving sticky as the economy continues to chug along and the labour market remains strong. Given all that and while being aware of financial conditions and the state of the banking sector, the Federal Reserve should hike rates again in early May.”

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