U.S. inflation fell slightly last month, but experts warn of price rise ahead - National | Globalnews.ca (2025)

U.S. inflation declined last month as the cost of gas fell, a sign that price growth was cooling even as President Donald Trump ramped up his tariff threats.

Consumer prices rose just 2.4 per cent in March from a year earlier, the Labor Department said Thursday, down from 2.8 per cent in February. That is the lowest inflation figure since September.

Excluding the volatile food and energy categories, core prices rose 2.8 per cent compared with a year ago, down from 3.1 per cent in February. That is the smallest increase in core prices in nearly four years. Economists closely watch core prices because they are considered a better guide to where inflation is headed.

The report shows that inflation is mostly cooling, for now. Yet President Donald Trump’s huge tariffs on China and 10 per cent universal duty are likely to push up prices in the coming months, economists say. The higher import taxes will likely weigh on growth as well.

On a monthly basis, prices actually fell 0.1 per cent in March, the first monthly drop in nearly five years. The cost of used cars, car insurance, and hotel rooms all fell. Core prices rose just 0.1 per cent in March from February.

The cost of groceries, however, jumped 0.5 per cent last month, the report showed, as egg prices leapt 5.9 per cent to a new record average price of $US6.23 a dozen.

Trump had imposed sweeping tariffs on nearly 60 nations last week, which sent financial markets into a tailspin and caused sharp drops in business and consumer sentiment. Yet on Wednesday he paused those duties for 90 days. He kept a steep 125 per cent tariff on all imports from China and 25 per cent duties on steel, aluminum, imported cars, and many goods from China and Mexico.

The remaining tariffs are still likely to lift inflation this year, economists say, even with the 90-day pause.

Even with the pause, many companies are still uncertain where trade policy will go next. Trump has also said that duties on pharmaceutical imports will be imposed.

Consumers will likely see some prices rise because of the existing duties, including the massive tariffs on China. The United States imports more than US$60 billion of iPhones and other mobile phones every year from China, as well as massive amounts of clothes, shoes and toys.

Many U.S. companies will likely shift production out of China, a process that had already started during Trump’s first term when he slapped duties on some of its exports. Still, China remains the Unite States’ third-largest trading partner.

Shifting supply chains out of China will also likely take time and come with its own costs, which could raise prices for U.S. consumers in the coming months.

Last week, Federal Reserve Chair Jerome Powell said that the central bank was likely to keep its key interest rate unchanged at about 4.3 per cent as it waited to see how Trump’s policies impacted the economy. Trump called for the Fed to cut rates on Friday.

“There’s a lot of waiting and seeing going on, including by us,” Powell said. “And that just seems like the right thing to do in this period of uncertainty.”