U.S. Inflation Eases to 5%, Lowest in Nearly Two Years

Underlying core inflation accelerated slightly in March.

U.S. inflation eased from a year earlier, but underlying price pressures remained elevated despite the Federal Reserve’s campaign to slow rapid price increases. “It’s not going to move the needle for the Fed,” said Steve Blitz, chief U.S. economist at TS Lombard. “The inflation problem doesn’t get solved by itself—it needs higher unemployment to get there.”

Households saw higher prices for food and shelter, and lower prices for gasoline and used vehicles.

Inflation remains elevated—well above the 2.1% average in the three years before the pandemic and the Fed’s 2% target.

Core prices, a measure of underlying inflation that excludes volatile energy and food categories, increased 5.6% in March from a year earlier, accelerating slightly from 5.5% the prior month. Core inflation, which economists see as a better predictor of future inflation, has stayed stubbornly high in part because of inflationary pressures from shelter costs.

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