The U.S. economy showed fresh signs of cooling in March, as headline inflation eased more than expected while jobless claims ticked slightly higher. According to the Labor Statistics Bureau, the annual inflation rate fell to 2.4% in March 2025, down from 2.8% in February and below the market estimate of 2.5%.
The energy index fell 3.3% in the 12 months through March, including a 2.4% decline on a monthly basis. Food prices, on the other hand, rose 3% year-over-year and were up 0.4% compared to February. The core Consumer Price Index (CPI), which excludes food and energy, climbed 2.8% year-over-year in March—down 0.3 percentage points from February. On a monthly basis, core CPI increased by 0.1% in March.
Month-on-month, the Consumer Price Index (CPI) declined by 0.1%, defying expectations of a 0.1% increase.
Core inflation, which excludes volatile food and energy prices, also surprised on the downside. It came in at 0.1% MoM, significantly lower than the forecasted 0.3%. On a yearly basis, core CPI stood at 2.8% YoY, compared to the estimated 3%.
In parallel, the U.S. Initial Jobless Claims for the week ending April 5 rose slightly to 2.23 lakh, up from 2.19 lakh in the previous week, suggesting a gradual softening in the labor market.
The report lands just under a day after markets surged in response to the latest trade news — a 90-day suspension of reciprocal tariffs for most countries, alongside a sharp hike in U.S. tariffs on Chinese imports.
While former President Trump has temporarily halted reciprocal tariffs, the 10% baseline duties imposed on most countries last weekend are still in effect. Additionally, Mexico and Canada continue to face separate tariffs tied to fentanyl concerns, and sector-specific duties on steel, aluminum, and automobiles remain unchanged.
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