March 2023 Inflation Breakdown: A Visual Guide To Price Changes Across Consumer Goods And Services- Thebanksathi

The U.S. Bureau of Labor Statistics reported that the consumer price index (CPI) fell to 5% in March 2023, from 6% in February. This is mainly due to lower energy and food prices, while house prices are expected to ease in the coming months.

Inflation for physical goods has eased, but inflation for services has become more sticky due to labor market dynamics. The banking turmoil is expected to cool the economy and inflation in the coming months. However, economists warn that price pressures will remain below the surface.

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A breakdown of the CPI for March shows that prices for eggs, margarine, and frozen vegetables had the most significant year-over-year increases, while prices for gasoline, televisions, and used cars and trucks had the most significant declines.

US Inflation Remains High But Supply Chain Problems Show
Signs Of Easing

According to the US Bureau of Labor Statistics, the Consumer Price Index (CPI) in the United States increased by 5% in March compared to the same month in 2021. This measure of inflation, which shows changes in the prices of consumer goods and services such as food, housing, electronics, and entertainment, rose 6% in February.

However, the slower rate of growth does not mean that prices are falling, just that they are rising more slowly than they were a year ago. Housing accounts for the largest share of household spending, so rising inflation in this sector has helped keep CPI readings high.

Paul Ashworth, the chief North American economist at Capital Economics, said there was “tremendous” patience in newly signed rental contracts, but the way economists calculate price changes in the housing category, it could take a year.

Flow in CPI Reports

Grocery prices fell 0.3% in March, the first monthly decline since September 2020, as lower diesel prices and easing supply chain issues helped push prices down.

A rapid economic restart after a pandemic-related shutdown boosted demand for dining, entertainment, and vacations fueled by government aid savings. However, the supply chain could not keep up with the demand. While inflation was initially limited to physical goods such as used cars and trucks, it is now affecting services including haircuts, auto insurance, airfare, medical care, and rent.

Strong Wage Growth

Low unemployment and historic demand for labor have driven up labor costs and caused businesses to raise their prices, particularly in labor-intensive service industries. The US Federal Reserve has been raising interest rates to control inflation.
The recent turmoil in the banking sector is expected to reduce banks’ willingness to lend, which will tighten credit conditions, cool the economy and ultimately bring inflation under control.

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