Topline
Bacon, gas and health insurance are some of the biggest driving factors behind slowing inflation in the U.S., according to Labor Department inflation data released Wednesday morning.
Key Facts
Consumer prices rose 5% in the 12-month period ending in March, cooling to its lowest annualized increase since May 2021 and coming in below economist projections.
Declining energy prices were the greatest contributor to the inflation slowdown, as energy prices slipped 6.4% as a whole from March 2022 to last month and gas dropped some 17.4% during the period.
Consumers also benefited from a decline in the cost of other everyday goods: bacon prices fell 5.5% during the most recent 12-month period on an unadjusted basis, citrus prices dropped 3.6%, used car prices dwindled 11.2%, smartphone prices slipped 23.9% and health insurance prices sank 10.7%.
On a monthly basis, eggs (down 10.9%), lettuce (down 5.4%), and tickets to sporting events (down 3.9%) were among the biggest fallers in price.
But considering inflation remains at a level not seen in several decades before the pandemic, Americans still dealt with soaring prices in major areas, with rent up 8.8% on an annual basis, the cost of food up 8.5%, partially driven by a 13.6% increase in cereal and baked goods prices, and the cost of transportation up 13.9% as airline fares spiked by 17.7%.
Tangent
Investors largely cheered on the latest inflation reading, as the Dow Jones Industrial Average and S&P 500 gained 0.5% apiece in early trading thanks to optimism the Federal Reserve may loosen its monetary policy as inflation slows.
What To Watch For
The Fed will release minutes from last month’s meeting of its policy-setting committee at 2 p.m., possibly revealing what it would need to see from the latest inflation report to support a pause on interest rate hikes.
Contra
Gas, which skyrocketed in price over the first half of 2022 as Russia’s invasion of Ukraine sparked uncertainty in the global energy market, is again rising in cost, hitting a five-month high last week. The elevated prices at the pump are once again due to geopolitical factors, as OPEC+, a powerful group of 20 oil-producing countries including Russia, agreed to cut oil production to drive up prices.
Prices Rose Another 5% In March—Lowest Inflation Reading In Nearly Two Years (Forbes)
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