A clearance sign is displayed at a retail clothing store in Downers Grove, Ill., Monday, April 1, 2024. On Friday, April 26, 2024, the Commerce Department issues its March report on consumer spending. (AP Photo/Nam Y. Huh)
WASHINGTON (AP) – A measure of inflation closely tracked by the Federal Reserve remained uncomfortably high in March, likely reinforcing the Fed’s reluctance to cut interest rates anytime soon and underscoring a burden for President Joe Biden’s re-election bid.
Friday’s report from the government showed that prices rose 0.3% from February to March, the same as in the previous month. It was the third straight month that the index has run at a pace faster than is consistent with the Fed’s 2% inflation target. Measured from a year earlier, prices were up 2.7% in March, up from a 2.5% annual rise in February.
After peaking at 7.1% in 2022, the Fed’s favored inflation index steadily cooled for most of 2023. Yet so far this year, the index has remained stuck above the central bank’s target rate. More expensive gas and higher prices for restaurant meals, health care and auto repairs and insurance, among other items, have kept the overall pace of price increases elevated. With new-car prices up sharply in the past few years, auto repair and replacement costs have risen especially fast.
Friday’s inflation data showed that excluding volatile food and energy costs, “core” prices rose by an elevated 0.3% from February to March, unchanged from the previous month. Compared with a year earlier, core prices rose 2.8% for a second straight month. The Fed closely tracks core prices, which tend to provide a particularly good read of where inflation is headed.
The chronically elevated measures of inflation have become a source of frustration for the Fed, whose policymakers had projected as recently as last month that they expected to cut their benchmark rate three times this year. Most economists expected the cuts to begin in June. More recently, though, several Fed officials, including Chair Jerome Powell , have signaled that they have no immediate plans to cut their key rate, a move that would eventually lead to lower rates for mortgages, auto loans, credit cards and many business loans.
