US inflation eases in March, but fail to meet expectations amid Trump tariffs

U.S. consumer inflation slowed down last month but missed the expectations, mainly because of a sharp drop in gasoline prices, according to official data released by the Bureau of Labor Statistics on Wednesday.

This development comes as both consumers and businesses watch nervously, anticipating the impact of President Donald Trump’s newly announced tariffs.

Just last week, President Trump revealed plans to impose tariffs of up to 50% on imports from certain countries. This announcement caused stock markets to fall and bond yields to rise. However, in a sudden reversal, he decided on Wednesday to apply these tariffs only to China, sparing other nations.

Before these market-shaking decisions took effect, inflation had already shown signs of easing. The consumer price index (CPI), which tracks changes in the prices of everyday goods and services, rose by 2.4% in March compared to the same time last year.

This figure was lower than what economists had expected, according to a statement from the Labor Department. Looking at monthly data, prices actually went down by 0.1% from February to March.

Lowering energy prices pull down the inflation

“The index for energy fell 2.4% in March, as a 6.3% decline in the index for gasoline more than offset increases in the indexes for electricity and natural gas,” the Labor Department explained.

In simple terms, while electricity and natural gas became slightly more expensive, the big drop in gasoline prices pulled overall energy prices down, leading to a slight month-to-month decline in inflation.

Meanwhile, the cost of food increased by 0.4% in March.

If we exclude the more unpredictable prices of food and energy, what’s known as “core inflation” rose by just 0.1% from February to March. Over the past 12 months, this core inflation rose by 2.8%.

According to the Labor Department, this was “the smallest 12-month increase since March 2021.”

It was also lower than what economists had predicted in surveys by Dow Jones Newswires and the Wall Street Journal.