U.S. Inflation Drops to 5% in March, Lowest in 2 Years

The U.S. Inflation dropped for the 12th month in a row as the annual inflation rate decreased to 5% in March 2023

U.S. Inflation Drops to 5% in March, Lowest in 2 Years
U.S. Inflation Drops to 5% in March, Lowest in 2 Years
U.S. Inflation Drops to 5% in March, Lowest in 2 Years
U.S. Inflation Drops to 5% in March, Lowest in 2 Years

There is no question that U.S. inflation is going down. The annual inflation rate fell to 5% in March 2023, which was the 12th time in a row that it went down. As we’ve seen over the last few months, inflation went down to 6% in February 2023, and it’s now gone down even more to 5%.

The United States Bureau of Labor Statistics has finally released the long-awaited March numbers. The current rate is 0.2% lower than what the market thought it would be.

CPI Shows Lower U.S. Inflation

The Consumer Price Index showed that annual inflation fell for the ninth month in March. And grocery prices went down every month for the first time since September 2020.

The Bureau of Labor Statistics said Wednesday that prices went up 5% in the year ending in March, which is less than the 6% rise in February.

The annual CPI dropped to its lowest level since May 20, which was helped by comparing it to the same time last year, when food and energy prices went up because Russia invaded Ukraine.

Index Results of Basket of Goods, Housing, Food

Still, the CPI showed a little bit of a slowdown each month. The index shows how prices for a basket of goods change over time, increased by 0.1% in March compared to a 0.4% rise in February.

According to the BLS, the most significant monthly gain came from shelter costs, which tend to show lagging data and made up for the sharp drops in energy costs.

The food-at-home index went down 0.3% for the month. This was because the prices of eggs, fruits, and vegetables decreased. The food category stayed the same for the first time since November 2020 (0% change).

Will 2023 Inflation Reach 12%?

At the beginning of 2023, the inflation rate in the U.S. was 6.4%. Since May 2021, when it was at its lowest, inflation is now at its lowest speed.

As has been seen, the inflation rate went down steadily in 2023. Even so, some people thought that inflation rates might increase by the end of 2023. Michael Wilkerson, the founder of Stormwall Advisors, recently said that U.S. inflation could reach a high of 12% by December 2023. But the chances of such a significant rise are lower after the most recent drop.

When U.S. consumer prices increased less than expected in March, the dollar dropped much earlier today. Right now, it seems less likely that the Federal Reserve will keep raising interest rates.

But it’s essential to remember that the Core CPI is still higher than last month, at 5.6% YoY. This shows that inflationary pressure has yet to go away completely. Analysts think that there could be one more increase.