Washington April 10 2025: U.S. consumer prices unexpectedly fell in March, but inflation risks are tilted to the upside after President Donald Trump doubled down on tariffs on imported Chinese goods even as he lowered duties on other nations.
The consumer price index dipped 0.1% last month after gaining 0.2% in February, the Labor Department’s Bureau of Labor Statistics said on Thursday.
The decline likely reflected lower energy costs and the fading effects of beginning of the year price hikes.
In the 12 months through March, the CPI advanced 2.4% after rising 2.8% in February. Economists polled by Reuters had forecast the CPI edging up 0.1% and climbing 2.6% year-on-year.
Excluding the volatile food and energy components, the CPI gained 0.1% in March after climbing 0.2% in February. The so-called core CPI inflation increased 2.8% year-on-year in March after rising 3.1% in February.
March’s data likely captured only a fraction of the first wave of Trump’s barrage of import duties, including a 20% tariff on Chinese goods, and levies on steel and aluminum.
Trump on Wednesday said he had paused targeted tariffs on trade partners for 90 days, less than 24 hours after steep new duties kicked in and plunged financial markets into turmoil.
But Trump jacked up duties on Chinese merchandise to 125% from 104% after Beijing hit back with a 84% tariff on U.S. goods. The European Union paused its first countermeasures against U.S. tariffs, though the bloc was not mentioned in Trump’s statement.
A 10% blanket duty on almost all U.S. imports remains in place. Trump’s tariffs, which he sees as a tool to raise revenue to offset his promised tax cuts and to revive a long-declining U.S. industrial base, have raised the odds of a recession over the next 12 months.
Capital Economics estimated that inflation will peak at about 4%, double the Federal Reserve’s 2% target. Minutes of the U.S. central bank’s March 18-19 meeting published on Wednesday showed policymakers were nearly unanimous that the economy faced risks of simultaneously higher inflation and slower growth.
