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Policymakers and economists say the latest data is only a temporary reprieve as tariffs could stoke higher inflation.
Year-over-year change in the Consumer Price Index
By The New York Times
- April 10, 2025Updated 12:07 p.m. ET
Inflation cooled unexpectedly sharply in March, a welcome development given the uncertainties surrounding President Trump’s global tariffs, which are widely expected to stoke price pressures while also denting growth.
The Consumer Price Index climbed 2.4 percent last month from a year earlier, a far slower pace than February’s 2.8 percent increase and the lowest annual rate since September. Over the course of the month, prices fell 0.1 percent.
A gauge tracking underlying inflation, which strips out volatile food and energy items, slipped to 2.8 percent in March, following a 0.1 percent monthly increase. Overall, that is the slowest annual pace for “core” inflation since 2021.
The report, released by the Bureau of Labor Statistics on Thursday, significantly undershot economists’ expectations, prompting Mr. Trump and his advisers to seize on the data as a sign that the president’s policies were working.
It “wasn’t just good, it was really great,” Stephen Miran, the chair of the White House Council of Economic Advisers, said of the inflation report. But economists warn that the positive news is unlikely to last with costly tariffs now in effect against China and other trading partners.
“We don’t see tariffs as a one-time price shock. We see them as having significant second round effects,” said James Egelhof, chief U.S. economist at BNP Paribas. “We expect that tariffs will first impact goods prices and then ultimately move through wages as the labor market remains fairly tight. That feeds back and affects other goods prices and services as well and creates a cycle in inflation."
