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Economic News

United States: Inflation Slows More than Expected

April 10, 2025
Francis Généreux
Principal Economist

Highlights

  • US consumer price index (CPI) fell 0.1 % in March, after rising 0.2 % in February. Core CPI, which strips out food and energy, rose just 0.1% in March, after rising 0.2% in February.
  • The year-over-year change in the all items index decreased from 2.8% to 2.4%. Core inflation fell from 3.1 % to 2.8 %.

Comments

Headline inflation hit its lowest level since February 2021 in March. This was the second consecutive month the monthly and yearly changes in the all items index came in at a more modest pace than forecasters expected. This time, the situation was greatly helped by energy, especially the drop in gas prices.

 

Closely watched by American consumers, food prices accelerated in March. This time, the increase was slightly more pronounced for groceries than for dining out. And yes, the famous price of eggs has gone up again (+5.9%), despite the White House rhetoric.

 

Prices for goods excluding food and energy recorded a significant monthly decline for the first time since August 2024. Two factors helped: a decline in used car prices and a sharp drop in drug prices. The evolution of goods prices is modest given that a second round of 10% tariffs was imposed on imports from China and that March also brought the first tariffs on Mexican and Canadian goods non-compliant with the USMCA, in addition to the return of the 25% tariffs on steel and aluminum. It will be interesting to see tomorrow if more tariff pressures have been transmitted to producer price.

 

There is a noticeable easing on the services side. Housing prices posted their smallest advance since August 2021 in March, mainly due to the sharp 4.3% drop in hotel prices ... Is this a consequence of foreigners' reluctance to travel to the United States? That's something to keep an eye on, but along the same lines, airfares fell 5,3% in March. These prices helped prices for services excluding energy and shelter to decline (-0.1%) for the first time since September 2021.

Implications

Price pressures eased in March. But this may only be temporary. The tariff increases already in place, even with the relief announced yesterday, will cause some prices to rise more quickly. Consumers are already aware of this, as evidenced by the recent jump in their inflation expectations. This environment remains challenging for the Federal Reserve, which has stood on the sidelines so far.

NOTE TO READERS: The letters k, M and B are used in texts, graphs and tables to refer to thousands, millions and billions respectively. IMPORTANT: This document is based on public information and may under no circumstances be used or construed as a commitment by Desjardins Group. While the information provided has been determined on the basis of data obtained from sources that are deemed to be reliable, Desjardins Group in no way warrants that the information is accurate or complete. The document is provided solely for information purposes and does not constitute an offer or solicitation for purchase or sale. Desjardins Group takes no responsibility for the consequences of any decision whatsoever made on the basis of the data contained herein and does not hereby undertake to provide any advice, notably in the area of investment services. Data on prices and margins is provided for information purposes and may be modified at any time based on such factors as market conditions. The past performances and projections expressed herein are no guarantee of future performance. Unless otherwise indicated, the opinions and forecasts contained herein are those of the document’s authors and do not represent the opinions of any other person or the official position of Desjardins Group.