Treasury Secretary Janet Yellen counterprogrammed the International Monetary Fund (IMF) on Tuesday when she assured that the economy is better than that global body predicted. The next day, the data seems to prove him partly right.
Inflation in the United States fell to 5% in March in its annualized value, a steeper decline than expected. This means the lowest level in almost two years, since May 2021, despite the fact that it is still very high, above the average of 2.1% for the three years prior to the pandemic. Prices rose 0.1% compared to the previous month, less than forecasted by experts.
The stock markets went up when this data was released. This percentage provided by the Department of Labor Statistics reflects what citizens pay for products and services.
In February, prices rose 0.4% and the consumer price index remained at 6%. The March data shows that the economy is beginning to cool off, the result of the stubbornness of the Federal Reserve (Fed or central bank) in its effort to restrict the price of money with nine consecutive increases in interest rates. Far away is inflation of 9.1% from June 2022, when the ceiling was touched and all the alarms sounded.
In one year the rates have gone from 0-0.25% to the current 4.75-5% and it is expected that they will rise another quarter of a point at the May meeting. Central bank governors believe that number is still too high relative to the Fed's 2% target, comfortable territory.
Despite confirming this good achievement, in relation to a year ago, the analysts remarked that this result will not change the determination of the Federal Reserve in its fight against prices.
Because, in addition, the core of this index, which excludes the most volatile elements such as food and energy, continues to be higher in total prices, partly due to inflationary pressure in the housing issue, with a price increase of 0 .6% in March and 8.2% annually. This core registered a price increase of 0.4% from one month to the next and stands at 5.6% on an annualized basis, above the 5.5% in February. This represents the first acceleration since last September.
The experts recalled that inflation should not be expected to slow down in a straight line.
A 3.5% reduction in the price of energy and the maintenance of food prices, unchanged compared to February, contributed decisively to the drop in inflation. The price of food at home, specifically, fell 0.3%, the first time this has happened since September 2020. Eggs are a good indicator. They have started to be less expensive, but they are still far from the usual prices of before.
The sale of second-hand cars, one of the factors that drove the initial rise in 2021, has registered a price drop of 0.9%, and this means that from one year to the next they are 11.2% cheaper.
