Inflation ticked higher in March, according to new Labor Department data released Wednesday.
The consumer price index (CPI), a popular measure of inflation, rose 0.4 percent last month and 3.5 percent annually, largely in line with economist projections. Economists had anticipated that inflation would increase 0.4 percent in March and 3.4 percent annually.
The latest numbers come after two months of hotter than expected inflation data. Consumers prices were up 3.2 percent year-over-year in February and 3.1 percent in January.
While inflation has eased significantly since June 2022 — when it peaked at a 40-year high of 9.1 percent — the Federal Reserve has been hesitant to declare victory and begin cutting interest rates.
The central bank raised rates to a two-decade high over the past two years in an effort to cool the economy and tame inflation.
However, the U.S. economy has continued to defy expectations, adding 303,000 jobs in March and maintaining an unemployment rate below 4 percent.
“Recent readings on both job gains and inflation have come in higher than expected,” Fed Chair Jerome Powell said last week, prior to the March jobs report.
“The economy added an average of 265,000 jobs per month in the three [months] through February, a faster pace than we have seen since last June,” he added. “And the higher inflation data over January and February were above the low readings in the second half of last year.”
Powell cautioned that it is “too soon to say whether the recent readings represent more than just a bump.”
After the central bank opted to hold interest rates steady last month, the Fed chair emphasized that the slight uptick in inflation hadn’t “really changed the overall story, which is that of inflation moving down gradually on a sometimes bumpy road toward 2 percent.”
How quickly inflation falls towards the Fed target could have serious implications for the likely rematch between President Biden and former President Trump in November.
Biden and Democratic lawmakers are pushing to turn public opinion about the economy around as the president continues to trail Trump in polling. Trump has a narrow 1 percent lead over Biden, according to The Hill and Decision Desk HQ composite average, and has held larger leads over Biden in economic approval.
While the economy has boasted remarkable resilience under Biden, the stubbornness of inflation and major changes wrought by the pandemic have dinged voter approval of his record.
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