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Consumer prices decreased 0.1% over the month but rose 2.4% over the year in March, slowing from the 2.8% over-the-year rise in February and coming in lower than expectations. Core CPI, which excludes more volatile energy and food prices, edged up 0.1% over the month and rose 2.8% over the year, the smallest 12-month increase since March 2021.

Shelter rose 0.2% over the month and 4.0% over the year, the smallest 12-month increase since November 2021. Meanwhile, energy costs fell 2.4% over the month in March, led by a 6.3% drop in the gasoline index. On the other hand, the decline in the gasoline index was offset by over-the-month increases in the indexes for natural gas (up 3.6%) and electricity (up 0.9%). Over the past 12 months, the energy index declined 3.3%. Meanwhile, prices for transportation services continued to edge down over the month (down 1.4%), but were still up 3.1% over the year, with motor vehicle insurance leading the increase, surging 7.5% over the year.

Food prices continue inching up, rising 0.4% over the month and 3.0% over the year in March. Although the food at home index grew 2.4% over the year, the underlying index for meats, poultry, fish and eggs increased 7.9% over the year in March. Driven by the bird flu outbreak, the index for eggs alone surged 5.9% over the month and 60.4% over the year. Meanwhile, food away from home rose 0.4% in March and was up 3.8% over the year.

As the over-the-year headline inflation rate remains elevated, markets are anticipating that the Federal Open Market Committee will keep rates steady at its meeting next month, but because of recent volatility in the markets, there’s less confidence in this expectation. Federal Reserve Chairman Jerome Powell said they’re likely to see a rise in inflation in coming quarters as higher tariffs will be working their way through our economy, and that their obligation is to make certain that a one-time increase in the price level does not become an ongoing inflation problem. These comments suggest that the Fed will likely keep its benchmark interest rate unchanged in the coming months, but if there were to be a liquidity issue induced by market volatility, that could shift the Fed’s decision-making.