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Economic News

United States: Inflation Picks Up

April 10, 2024
Francis Généreux
Principal Economist


  • The consumer price index (CPI) went up 0.4% in March, after a similar increase in February. Core CPI, which excludes food and energy costs, also rose 0.4% in March, just as it had in the previous two months.
  • Year-over-year, total CPI growth accelerated, going from 3.2% in February to 3.5% in March. Core inflation held steady at 3.8%.


Inflation is proving to be decidedly sticky. It’s now at 3.5%, its highest rate since September. This is a disappointing turn of events following its drop to 3.0% in June 2023. Instead of nearing the Fed’s target, the year-on-year growth in prices appears to be moving farther away.


Once again, some of the rise in inflation is due to changes in energy prices. Energy prices increased 1.1% in March, led by a 1.7% jump in gas prices. This is in stark contrast to the 2.7% drop in energy prices we saw in March 2023, and is one of the main factors pushing up annual total CPI growth.


Core CPI, which strips out food and energy, remains disappointingly stubborn. The monthly variation of 0.4% is slightly higher than the 0.3% previously expected. And once again, we can see a significant difference in the prices of goods and services. After posting short-lived growth of 0.1% in February, prices for goods excluding food and energy fell 0.2% in March. This is the ninth monthly drop in ten months. Prices decreased for new and used vehicles, appliances, recreation commodities and smartphones. The decline in goods prices (-0.7% year-over-year) reflects lower supply chain pressures and weak prices on goods from China.


Meanwhile, service prices (excluding energy) continue to rise sharply. As in February, the monthly increase was 0.5%. It’s better than the 0.7% recorded in January, but isn’t a real improvement compared to late 2023—and it doesn’t suggest that inflation will return to its 2% target any time soon. Housing costs crept up to 0.5% after rising 0.4% in February. This is also slightly above the average for the second half of 2023. Medical care service costs were also up, as were insurance and motor vehicle repair.


Inflation remains high in the United States, and recent changes have been rather disappointing. Compared to last summer, annualized quarterly change seems to be on the rebound. With the labour market still holding strong and economic growth quite resilient, it will be difficult for the Federal Reserve to justify implementing key rate cuts as early as June.

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