US Consumer Prices Rise 3.3 Percent in March Report
U.S. consumer prices rose 3.3% in March as the conflict with Iran drove energy costs higher. Core inflation remained lower than expected at 2.6% annually.
The United States consumer price index rose 3.3% from a year ago in March, providing the first data point on price pressures following the outbreak of conflict between Israel and Iran. The inflation figures, released Friday, matched the expectations of economists polled by Reuters and represented an increase from the 2.4% rate reported in February. On a monthly basis, the index climbed 0.9%, also in line with estimates. Core inflation, which strips out volatile food and energy costs, rose 0.2% from the previous month and 2.6% from a year earlier, both figures slightly outperforming market forecasts. Investors have closely monitored this report due to concerns that rising prices for West Texas Oil and Natural Gas resulting from the Middle East war could spark a broader inflationary trend. Market reaction was relatively muted, with the Dow Jones Industrial Average, the S&P 500, and the Nasdaq Composite all gaining between 0.1% and 0.2%. U.S. Treasury yields saw a minor uptick, with the 10-year note reaching 4.30%, while the U.S. dollar index declined by 0.2% to 98.6. Peter Cardillo, chief market economist at Spartan Capital Securities, noted that the core rate remains a critical indicator. > The key here is the core rate, which actually came in a little bit lower than we were looking for. Alexandra Wilson-Elizondo, global co-CIO of multi-asset solutions at Goldman Sachs Asset Management, suggested that the current figures might provide the Federal Reserve with some flexibility. > We believe the Fed will look through the energy-driven noise so long as these factors hold. Marc Chandler, chief market strategist at Bannockburn Global Forex, indicated that the data likely keeps the central bank on its current path. > I think that the bar to a Fed change later this month is very high, and the CPI was largely in line with expectations. Brian Jacobsen, chief economist at Annex Wealth Management, observed that while energy prices are a concern, they have not yet permeated the broader economy. > Perversely, consumers cutting back on other discretionary items could push core inflation lower instead of higher.
