Washington: US inflation increased more-than-expected in March 2024 mostly driven by petrol and shelter costs, pushing away hopes of a June interest rate cut from the US Federal Reserve.
The US consumer price index (CPI) rose 0.4 per cent sequentially–higher than Wall Street estimates, according to data released by the Labor Department’s Bureau of Labor Statistics on Wednesday, reports said.
In the 12 months through March, the CPI increased 3.5 per cent year-on-year (YoY)–the biggest gain in six months (since September 2023). This follows a 3.2 per cent rise in February 2024. Measured from a year earlier, these core prices were up 3.8 per cent, unchanged from the YoY rise in February. The Fed closely tracks core prices; it provides a reliable print of where inflation is headed in the world’s largest economy.
The shelter and gasoline or petrol prices accounted for more than half of the increase in the monthly CPI, according to the Labor Department. According to a survey of economists conducted by Dow Jones Newswires and The Wall Street Journal, the CPI was projected to gain 0.3 per cent on the month and advance 3.4 per cent on a year-on-year basis.
Gas prices surged 1.7 per cent from February to March and clothing costs 0.7 per cent. The average cost of auto insurance jumped 2.6 per cent last month and is up 22 per cent from a year ago, partly reflecting purchases of higher-priced vehicles. Shelter costs, which include rents, rose 0.4 per cent, same as February.
Food prices rose 0.1 per cent, though grocery food inflation was unchanged at 2.2 per cent, amid declines in the costs of butter and cereals and bakery products, which recorded their largest monthly decrease since 1989. But prices for meat and eggs rose. There was a modest increase in the prices of fruits and vegetables.
With the US inflation print, leading financial markets anticipate that the Fed would delay cutting interest rates until September. Fed Chair Jerome Powell has repeatedly said the US central bank is in no rush to start lowering borrowing costs.
