Editor’s note: This story has been updated with additional details.
Inflation in the United States rose again in March, exceeding economists’ expectations and disappointing investors who had expected imminent interest rate cuts from the Federal Reserve.
The annual consumer price index (CPI) inflation rate rose to 3.5% last month, according to data released Wednesday by the Bureau of Labor Statistics.
March inflation report: key figures
- The annual CPI inflation rate rose from 3.2% in February to 3.5% in March 2024, marking the second consecutive month of increases and beating expectations for a 3.4% increase.
- On a monthly basis, the consumer price index grew at a pace of 0.4%, maintaining the previous month’s momentum and beating forecasts by 0.3%.
- The gasoline index rose 1.7% month-on-month. On a year-over-year basis, gasoline costs rose 1.3%, up sharply from February’s 3.9% decline.
- Excluding food and energy costs, the core CPI inflation rate stood at 3.7% year-on-year, down slightly from February’s 3.8% rate, in line with expectations.
- On a monthly basis, core CPI advanced at a pace of 0.4%, in line with the 0.4% seen in February, but above estimates of 0.3%.
- The housing index increased 0.4%, contributing significantly to the overall monthly increase in the index for all items excluding food and energy.
| CPI indicator | February 2024 | March 2024 | Expectations |
|---|---|---|---|
| Headline inflation rate (y/y) | 3.2% | 3.5% | 3.4% |
| Headline inflation rate (M/M) | 0.4% | 0.4% | 0.3% |
| Core inflation rate (y/y) | 3.8% | 3.8% | 3.7% |
| Core inflation rate (M/M) | 0.4% | 0.4% | 0.3% |
Market reactions
Ahead of the inflation report, investors had priced in a 54% chance of an interest rate cut by the Federal Reserve in June.
The warmer-than-expected March inflation report could further dampen these expectations as policymakers are likely to keep interest rates higher for longer to counter renewed inflationary pressures.
Within minutes of the release, Treasury yields surged, with the two-year Treasury yield rising 17 basis points to 4.9%, on track to close at its highest level since late November 2023.
Chart: US 2-year yields rise sharply after Consumer Price Index report
The US Dollar Index (DXY), as tracked by the Invesco DB USD Index Bullish Fund ETF UUPit strengthened by 0.5%, supported by growing expectations of a delay in interest rate cuts.
Gold, as tracked through the SPDR Gold Trust GLDfell by 0.3%
Futures on major U.S. indexes traded lower in premarket trading on Wednesday, with technology underperforming the broader market. As of 8:54 a.m. in New York, the Nasdaq 100 was down 1.4%.
Read now: Bond trader places biggest bet ever on Fed rate cuts in 2024 ahead of March inflation report
Photo via Shutterstock.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.