The latest Consumer Price Index report shows inflation at 5%, down from 9% in June 2022, but prices continue to rise.
The Bureau of Labor Statistics reported on Wednesday that the annual rate of inflation is now at 5%. It is the lowest it has been in nearly two years, since May 2021. Inflation was 9% in June 2022.
However, consumers won’t see much relief as prices continued to rise, resulting in an overall increase of 0.1% in March following a 0.4% increase in February.
While there was a 3.5% decline in energy costs month-to-month, the index for shelter more than offset a decline in the energy index making it the largest contributor to the monthly all items increase.
“The index for all items less food and energy rose 0.4 percent in March, after rising 0.5 percent in February,” the report stated. “Indexes which increased in March include shelter, motor vehicle insurance, airline fares, household furnishings and operations, and new vehicles. The index for medical care and the index for used cars and trucks were among those that decreased over the month.”
Compared to March 2022, the all items less food and energy index rose 5.6% over the last 12 months and the food index increased 8.5% over the last year. The energy index decreased 6.4% for the 12 months ending March.
How this latest report impacts what the Federal Reserve decides to do with interest rates is yet to be determined. The Fed has continued to steadily raise its key interest rate, adding another 25 basis points in March. Another increase could come in May when the Fed meets next as it seeks to regulate the economy by essentially making borrowing and investing more costly.
The White House issued a statement from President Joe Biden early Wednesday morning, saying the report shows continued progress in their fight against inflation.
“This progress follows last week’s news that our job market remains historically strong. Inflation has now fallen by 45% from its summer peak. Gas prices are down more than $1.40 from the summer, and grocery prices fell in the month of March for the first time since September 2020,” Biden is quoted as saying in the White House release. “In recent months, we have also seen price declines for items like used cars, smart phones, and other electronics. While inflation is still too high, this progress means more breathing room for hard-working Americans – with wages now higher than they were 9 months ago, after accounting for inflation.”