Is U.S. Inflation Still Heading in the Right Direction?

Executive summary:

  • With a 0.36% increase from February, the U.S. core CPI reading for March exceeded consensus expectations
  • The European Central Bank hinted it could start cutting rates in June
  • Fitch downgraded China's debt outlook, citing economic growth risks

On the latest edition of Market Week in Review, Investment Strategist BeiChen Lin and Product Operations Analyst McKenna Painter unpacked the latest U.S. inflation numbers. They also discussed recent rate decisions by the European Central Bank (ECB) and the Bank of Canada (BoC) as well as the economic and market outlook for China.

U.S. consumer prices rise by more than expected in March

Painter and Lin kicked off their conversation with a look at the U.S. CPI (consumer price index) report for March, published by the Labor Department on April 10. Lin said that the March numbers were a little bit on the disappointing side, with the core CPI rising 0.36% from February—hotter than the 0.30% monthly increase expected by analysts. “March marked the third month in a row with a slightly-higher-than-anticipated monthly increase in core inflation,” he said, explaining that price pressures also surprised to the upside in February and January. Lin added that much of March’s upside surprise stemmed from transportation services, with vehicle insurance in particular seeing a notable upward tick.