March’s Consumer Price Index (CPI) could be the last time investors see moderating inflation as President Trump’s tariff spree threatens to upend recent easing in price growth.
The report, set for release at 8:30 a.m. ET on Thursday, will greet investors less than 24 hours after markets rallied on the latest trade development: a 90-day pause on reciprocal tariffs for most countries and a simultaneous increase of US levies on Chinese imports.
“The March CPI data will feel dated,” Wells Fargo economist Sarah House said in a preview of the report. “But [it] should shed some light on how the changing trade environment was already beginning to affect pricing.”
Price increases are expected to have mostly moderated during the third month of the year. Monthly core prices, however, are expected to remain sticky after February’s report registered the first deceleration in price growth for both headline and core CPI since July.
Headline annual inflation is forecast to come in at 2.5% in March, a slowdown from February’s 2.8% annual gain. On a month-over-month basis, prices are estimated to rise 0.1%, below the 0.2% increase seen in February.
On a “core” basis, which strips out the more volatile food and energy costs, CPI is expected to have risen 3.0% over the past year in March. That’s a touch below February’s 3.1% increase, which was the lowest yearly increase in core CPI since April 2021.
Monthly core price increases are anticipated to rise 0.3%, ahead of February’s 0.2% rise.
Although Trump has paused reciprocal tariffs (for now), the 10% baseline duties that went into effect last weekend for most countries remain. Mexico and Canada still face a separate set of duties related to fentanyl, while separate industry-specific tariffs on steel, aluminum, and autos remain unchanged.
The president also announced he would unilaterally raise the tariff rate on China to 125%, citing “the lack of respect that China has shown.”
Read more: What Trump’s tariffs mean for the economy and your wallet
Core inflation has remained stubbornly elevated due to sticky costs for shelter and services like insurance and medical care. But shelter prices did show further signs of easing in February, rising 4.2% on an annual basis, the smallest 12-month increase since December 2021.
Still, given shifting trade dynamics, Wells Fargo’s House said March looks set to mark the low point in core inflation this year as tariffs lead to faster price growth. That, coupled with rising fears of a self-inflicted recession, has kept the Fed in “wait-and-see” mode when it comes to interest rates.
