US inflation falls to 5% and ‘better than expected’

Ministry of Labor USA reported that the inflation rate fell to 5% in the last twelve months to March. This is the lowest level in the last two years.

Although reduction is important, it is still far from the goal. Federal Reserve (Fed, Central Bank), which expects annual growth of 2%.

Although the moderation of the CPI is in line with what specialists expected, who forecast inflation at 5.1% in March, since it was 6% in February. If we compare month by month, inflation reached 0.1% against the forecast of 0.2%. In February, the growth was 0.4% compared to January.

“This report shows continued progress in our fight against inflation”, – US President Joe Biden said in a statement. In addition, he explained that the fall in energy prices (3.5% and 6.4% per year) is holding back growth.

Core inflation continues to rise

As for core inflation, which excludes food and energy also moderated to 0.4% from 0.5% in February; although in annual terms it still stands at 5.6%, which is one point lower than in February.

By how much has the interest rate increased?

To control inflation, the Fed raised nine times in a row interest rateto make credit more expensive and discourage consumption and investment.
“There are encouraging signs. (…) But as core inflation remains high, there is a strong possibility that the Fed will continue to tighten “core rates” with a final 25 basis point hike at the next meeting, scheduled for May 2-3,” commented Paul. Ashworth, economist at Capital Economics.