The cost of living in the United States remained high in March, according to a government report released on Wednesday. Prices for items like rent and car insurance continued to rise, which may cause the Federal Reserve to reconsider when and by how much to lower interest rates this year.
Core prices, which exclude food and energy costs, increased by 0.4% from February to March, the same rate as the previous month. Over the past year, these core prices have risen by 3.8%, which is well above the Fed’s target of 2% inflation.
These persistently high inflation numbers may make it less likely for the Fed to cut interest rates multiple times this year, as they had previously suggested. The Fed wants to be confident that inflation is steadily declining before making any significant changes to interest rates.
Of course, the high prices have disappointed not only the Fed, but also consumers.
Overall prices, including the volatile prices of food and energy, rose by 0.4% from February to March, and by 3.5% compared to a year ago. In February, that Figure was only 3.2 percent.
Although overall inflation has dropped significantly from its peak of 9.1% in June 2022, prices remain much higher than they were before the pandemic. That’s perhaps especially the case with grocery prices.
The Fed’s decision on when and by how much to cut interest rates will depend on future inflation reports and signs of economic growth. Some economists question the need for rate cuts if the economy remains healthy, while others believe it may be too soon to consider such measures.
The Associated Press contributed to this article.