By Christopher Lugerber, Economics writer for the Associated Press
WASHINGTON (AP) – U.S. inflation fell last month as gas costs fell. This is a sign that even if President Donald Trump strengthened his tariff threat, price growth was still cooled.
Consumer prices rose just 2.4% in March of the previous year, the Labor Bureau said Thursday that it had fallen from 2.8% in February. That’s the lowest inflation count since September.
Excluding the volatile food and energy categories, core prices rose 2.8% from 3.1% in February compared to a year ago. This is the smallest rise in core prices in nearly four years. Economists are looking closely at core prices as they are considered a better guide to where inflation is headed.
The report shows that inflation rates are pretty much cooled for now. But President Donald Trump’s huge tariffs and a universal 10% obligation on China are likely to push prices up in the coming months, economists say. Higher import taxes may also weigh growth.
Monthly, prices actually fell 0.1% in March, the first monthly decline in nearly five years. Used cars, car insurance and hotel rooms costs have all been reduced. Core prices rose just 0.1% between February and March.
However, grocery costs rose 0.5% last month, according to the report, egg prices rose 5.9% to a new record average price of $6.23 per dozen.
Last week, Trump imposed swept tariffs on nearly 60 countries, sending financial markets to tailspin, causing a sharp drop in business and consumer sentiment. However, on Wednesday he suspended those duties for 90 days. He maintained a 125% tariff on all imports from China and maintained a 25% operation on steel, aluminum, imported cars, and many goods from China and Mexico.
The remaining tariffs are likely to raise inflation again this year, economists say even in a 90-day suspension.
Even after a pause, many companies are still uncertain where trade policies will move on. Trump also said he would be subject to a drug import obligation.
Consumers could see some price rise due to existing obligations, including large tariffs in China. The US imports over $60 billion in iPhones and other mobile phones from China each year, and imports a large amount of clothing, shoes and toys.
Many US companies could shift production out of China. This is a process that began when Trump had already imposed several obligations on exports during his first term. Still, China is the third largest trading partner of the united state.
Moving a supply chain from China can take time and can be costly on its own.
Last week, Federal Reserve Chairman Jerome Powell said it is likely that it hasn’t changed its key interest rates to around 4.3% as central banks waited to see how Trump’s policies affected the economy. Trump asked the Fed on Friday to cut fees.
“We’re seeing a lot of waiting times going on, including us,” Powell said. “And that seems right in this period of uncertainty.”
Original issue: April 10th, 2025 9:20am EDT
