span>span>Thursday 10th April 2025/span>span> - 14:35 (BST)/span>/span>
US inflation continued its downward trend in March, prior to recent tariff announcements and offering US consumers a welcome rest bite from sharper 2024 climbs. Prices rose 2.4% year-on-year, down from 2.8% in February and coming in below economists’ expectations of 2.6%. This marks the lowest annual inflation rate since September and reflects a broader cooling of price pressures across key sectors.
A sharp drop in energy costs drove much of the decline, with gasoline prices falling nearly 10% from a year earlier. Fuel oil also became cheaper, while natural gas bucked the trend, registering a notable increase. The cost of shelter, used vehicles and transport services also grew at a slower pace. On the flip side, food prices picked up slightly - a reminder that not all households are feeling the benefit of easing inflation.
Perhaps most strikingly, the overall consumer price index dipped by 0.1% compared to February - marking the first monthly decline since the early days of the pandemic in 2020. Core inflation (which strips out volatile food and energy prices) also softened - rising just 2.8% annually, its slowest pace in four years.
The softer inflation figures may influence the Federal Reserve’s stance on interest rates which have remained elevated as the central bank tries to tame post-pandemic price surges. Should this trend continue, it could strengthen the case for rate cuts later this year and further quell recent USD demand.
Complicating the economic landscape are President Trump's recent tariff announcements. While aimed at addressing trade deficits, these tariffs are expected to raise import prices and potentially fuel inflation along with consumer spend. The combination of easing inflation and impending tariffs creates a complex environment for the US dollar as investors weigh the effects of trade policies and monetary decisions on the currency's strength.
