The rise in fuel prices and the extremely high mortgages and rents have caused inflation to rise more than expected in March, worsening the prolonged and painful battle Americans face against high costs.
The consumer prices in the United States grew to 3.5% annually in the 12 months ending in March, according to the latest Consumer Price Index data released on Wednesday (10) by the Bureau of Labor Statistics.
This represents a considerable increase from the 3.2% rate in February and marks the largest annual gain in the last six months.
President Joe Biden acknowledged on Wednesday that there is “more to do” to reduce inflation.
“Today’s report shows that inflation has fallen more than 60% since its peak, but we have more to do to reduce costs for working families. Prices are still very high for housing and groceries, even though the prices of essential household items like milk and eggs are lower than a year ago,” Biden said in a statement.
Inflation has been one of the most negative aspects of Biden’s presidency, as he seeks re-election this year.
What This Means for Interest Rates
“You can say goodbye to the interest rate cut in June,” wrote Greg McBride, chief financial analyst at Bankrate, in a comment released on Wednesday. Following the report’s release, the probability of a rate cut in June fell to 21%, down from 53% on Tuesday and 73% last month, according to the CME FedWatch tool.
U.S. stocks plummeted on Wednesday after the release of hotter-than-expected inflation data, with the Dow Jones dropping more than 500 points.
The Fed – American Central Bank – wants to see significant progress in reducing inflation before it starts cutting rates.
The pace of price increases has slowed sharply in 2023, but this progress has faced obstacles earlier this year.
Source: CNN