NEW YORK: US consumer inflation slowed in March, according to US data Wednesday, lessening the pressure on the Federal Reserve to maintain its aggressive posture to cool the economy.
The rate of inflation year-over-year fell to 5.0 percent last month from 6.0 percent in February, the smallest 12-month increase since May 2021, according to the Bureau of Labor Statistics.
The report showed a 0.1 percent increase in March over the prior month on a seasonally adjusted basis, much lower than the 0.4 percent reading in February and also below the 0.3 percent that had been expected by analysts.
The report is the latest evidence that the Fed's streak of interest rate hikes over the last year is weighing on economic activity.
The inflation data came on the heels of last Friday's employment report, which showed a solid pace of job growth in March and the unemployment rate falling back to 3.5%.
Persistently high inflation, labor market tightness and signs that financial market stress, wrought by last month's collapse of two regional banks, is easing should allow the Fed to continue prioritizing restoring price stability.
Financial markets are leaning toward the US central bank increasing rates by another 25 basis points at the May 2-3 policy meeting, according to CME Group's FedWatch tool.
The Fed last month raised its benchmark overnight interest rate by a quarter of a percentage point, but indicated it was on the verge of pausing further rate increases in a nod to the financial market turmoil. It has hiked its policy rate by 475 basis points since last March from the near-zero level to the current 4.75%-5.00% range.
