In March 2025, U.S. inflation showed signs of cooling. The Consumer Price Index (CPI), which tracks changes in the cost of goods and services, rose by 2.4% compared to last year, a drop from February’s 2.8%. This was mainly because gas and energy prices fell. However, core inflation (which excludes food and energy) still increased by 2.8%, its smallest gain in over three years.
On the jobs front, the labor market remained steady. Initial jobless claims rose slightly to 223,000 in early April, which is still considered low. The unemployment rate went up a bit to 4.2%, while the economy added 228,000 new jobs in March.
Despite improving inflation, concerns remain. Federal Reserve officials warned that trade tensions and tariffs could push inflation higher again and lead to more job losses. Consumer confidence also dropped sharply in April, with people expecting inflation to rise more in the year ahead.
