WASHINGTON — Consumer inflation remained persistently high last month, boosted by gas, rents, auto insurance and other items, the government said Wednesday in a report that will likely give pause to the Federal Reserve as it considers how often — or even whether — to cut interest rates this year.
On Wall Street, traders sent stock prices tumbling and bond yields rising, reflecting fear that the Fed may delay interest rate cuts indefinitely. The broad S&P 500 stock index was off about 1% in late-morning trading. Biden had previously suggested that lower inflation would lead the Fed to cut rates, but he hedged that prediction on Wednesday. “This may delay it a month or so,” Biden said at a news conference with Japanese Prime Minister Fumio Kishida, adding that he’s “not so sure” exactly what the Fed would do.
Clothing costs jumped 0.7% in March, the second straight month of sizable increases, though they have barely risen over the past year. Grocery prices, though, were unchanged last month and are just 1.2% higher than they were a year ago, providing some relief to consumers after the huge spikes in food prices in the previous two years.
Though inflation has plummeted from its peak of 9.1% in June 2022, average prices are still well above where they were before the pandemic. This has meant hardships for many lower-income families, whose wages may not have fully kept up with rising prices.