💥 One closely watched inflation indicator 🛒 experienced a slowdown last month, signaling that prices were gradually decreasing before the implementation of most tariffs imposed by President Donald Trump.
✨ Meanwhile, consumer spending accelerated, perhaps in an effort to anticipate the imposition of tariffs.
✨ A report from the U.S. Department of Commerce released on Wednesday showed that consumer prices rose by only 2.3% in March compared to the previous year, down from the 2.5% recorded in February. When excluding volatile categories such as food and energy, core prices rose by 2.6% compared to last year, which is less than the 2.8% recorded in February. Economists pay special attention to core prices as they usually provide a more accurate reading of future inflation trends.
✨ The slowdown in inflation could represent a temporary respite before the broad tariffs imposed by Trump begin to drive prices up in many sectors. Economists expect the recent inflation trend to change, reaching 3% or more by the end of the current year.
⬆️ Acceleration in consumer spending 🛒
✨ Wednesday's report showed that consumer spending rose by 0.7% from February to March, a healthy increase. Car sales saw a notable jump last month, as consumers and businesses rushed to buy in anticipation of impending tariffs. However, car sales are expected to decline in the coming months in reaction to this accelerated buying.
✨ Earlier on Wednesday, the government reported that consumer spending slowed during the first three months of the year compared to the last quarter of the previous year, due to adverse weather conditions that negatively affected shopping activity, in addition to a decline in spending after a strong winter holiday season.
