Inflation in March was sharply lower. Does anyone care?
Posted on April 11, 2025
Inflation for March was less than half the rate of February. The most-widely reported measure, seasonally adjusted inflation, decreased very slightly in March; the last six months point to about 3.0% annual rate. Core inflation, the measure closest to the one the federal reserve favors, was less than a quarter of February’s rate; the last six months points to about 3.0% annual rate. In past months, the stock market reacted sharply to news on inflation. It ignored this news on Thursday: down about 3.5%. It’s obviously looking to the future and the effect of tariffs on inflation and our economy.
I display a table and six graphs that I use to follow the trends in inflation.
Details:
The two most widely-reported measures of inflation are Seasonally-adjusted inflation and Core inflation.
Seasonally-adjusted inflation is the most widely reported measure of inflation. March inflation was negative. The last prior month of decline was May of 2020, almost five years ago.
Core inflation excludes volatile energy and food components. This is similar to the measure favored by the Federal Reserve. Inflation was less than a quarter of the rate in February. We have to go back four years to find a month that was lower. The last six months average to 3.0% annual rate.
Personal Consumption Expenditures (PCE) excluding Food and Energy is the measure of inflation that the Federal Reserve Board favors. The graph shows the data ending Feburary; data for March is issued at the end of this month. The last six aim at an annual rate of 3.1%.
== History of 12-month inflation rates ==
Full-year inflation measured by CPI-U shows that inflation for the last 12 months is at 2.4%.
== Producer’s Price Index ==
The change in producer prices will impact consumer inflation. PPI for March was below 0%. The high rates in January and February appear to be outliers.
== Services ==
Inflation in March for services was half the rate of February. The last six months average to 3.6% annual rate.
Conclusion: The inflation measures released this week for March are half or less the inflation in February. This is good news on inflation. The stock market ignored this information and declined more than 3.5%. Recent months point to about 3.0% annual inflation.