U.S. consumer prices rose modestly in March, with the Consumer Price Index (CPI) expected to increase just 0.1%, the smallest gain in eight months, mainly due to lower energy prices. Core inflation, which excludes food and energy, likely rose 0.3%.
Annually, CPI is forecast to rise 2.6%, slightly lower than February’s 2.8%. Core CPI may show a 3.0% increase year-over-year, easing from February’s 3.1%.
However, new inflationary pressures are building, as President Trump raised tariffs on Chinese imports from 104% to 125%, following China’s 84% retaliatory duties. Though tariffs on other countries were paused for 90 days, economists warn that price increases on imported goods — like clothing, electronics, and furniture — will start filtering into CPI in the coming months.
Some analysts expect inflation could peak around 4% later this year if tariffs continue, especially as goods prices rise while wage growth remains soft and the labor market cools.
Economists note that services inflation, particularly in travel and hospitality, remains weak, reflecting reduced demand and stalled wage gains. Egg prices, which spiked earlier this year, are also expected to stabilize due to declining bird flu cases and falling wholesale costs.
The Federal Reserve, which paused interest rate cuts earlier this year, is now expected to resume easing in June as it weighs the dual risks of higher inflation and slower growth.