Updated Apr 10, 2024 - Economy

Consumers feel pinch as inflation remains elevated for third straight month

customer in grocery store — A customer shops for food at a grocery store last month in San Rafael, Calif. Photo by Justin Sullivan/Getty Images

The Consumer Price Index rose 0.4% in March, while a closely-watched measure that strips out food and energy costs rose by just as much—matching the same pace as the prior two months, the government said Tuesday.

Why it matters: The latest data, which also show a pick-up in the annual CPI figure, extends a streak of hotter inflation releases than policymakers would like — a key sign that returning inflation back to 2% might take longer than anticipated.

By the numbers: In the 12 months through March, overall inflation was 3.5%, compared to the 3.2% as of February.

Core CPI, which strips out food and energy prices, didn't budge: it was 3.8%, holding at the lowest since 2021.

Context: Fed chair Jerome Powell has been measured in public comments about January and February inflation data that showed prices rising at a quicker pace — a contrast to the more muted data at the end of 2023.

That's one reason why economists have been watching this inflation release much more closely: they saw it as key to whether it might force the Fed to reconsider its predictions for when and how much it might slash interest rates.

The report drove analysts to mark down their expectations for future Fed rate cuts, sending convulsions through global bond markets. The yield on two-year Treasury securities — particularly sensitive to the expected path of policy — soared by 0.19 percentage points to 4.94% as of 8:45am ET.

Go deeper: This chart explains why inflation felt so bad

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Consumers feel pinch as inflation remains elevated for third straight month

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