The March figures, the third straight month of inflation readings well above the Fed’s 2% target, threaten to torpedo the prospect of multiple interest rate cuts this year.
Prices outside the volatile food and energy categories rose 0.4 percent from February to March, the same accelerated pace as in the previous month. Measured from a year earlier, these core prices were up 3.8 percent, unchanged from the year-over-year rise in February. The Fed closely tracks core prices because they tend to provide a good read of where inflation is headed.
Overall consumer prices rose 0.4 percent from February to March, also the same as the previous month. Compared with 12 months earlier, prices rose 3.5 percent, up from a year-over-year figure of 3.2 percent in February. Early this year, Wall Street traders had projected that the Fed would cut its key rate up to six or seven times in 2024. In March, Fed officials signaled that they envisioned three rate cuts. But elevated inflation readings for January and February — along with signs that economic growth remains healthy — led several Fed officials to suggest that, and the unemployment rate fell to a low 3.8 percent from 3.9 percent.