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US Inflation Rises Faster Than Expected In March, But Unlikely to Deter Fed

U.S. headline inflation rose to a 12-month pace of 2.6% in March, the Labor Department’s Bureau of Labor Statistics reported in its latest CPI report, accelerating from the 1.7% increase reported last month.

The pace exceeded economists’ average estimate for a 2.5% increase.

The gauge of consumer prices is now rising at its fastest since August 2018, largely due to base effects from the pandemic-induced recession that rattled the economy a year ago, when the lockdown-induced drop in demand sent costs tumbling for many goods and services.

The CPI report is particularly important for some cryptocurrency investors who view bitcoin (BTC) as a hedge against inflation and ongoing currency debasement. However, concerns about higher inflation beyond the 2% threshold could cause the Federal Reserve to consider tightening monetary policy, which could weigh on risk assets.

Federal Reserve Chairman Jerome Powell has said he views higher inflation as temporary and not enough for the U.S. central bank to alter its record-low interest rate policies.

  • On a month-to-month basis, headline March CPI increased 0.6%, beating expectations for a 0.5% rise after rising 0.4% in February.
  •  The March 1-month increase was the largest rise since a 0.6% increase in August 2012, according to the U.S. Bureau of Labor Statistics.
  • The gasoline index continued to increase, rising 9.1% in March, and accounted for nearly half of the seasonally adjusted increase in CPI.

   

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