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As he navigates what has been described as a very personal trip to Northern Ireland and the Republic of Ireland, President Joe Biden received good news from the other side of the Atlantic, with the latest data from the Bureau of Labor Statistics (BLS) showing that inflation has dropped significantly.
On Wednesday at 8:30 a.m. ET, the BLS published the latest data about inflation in the U.S., March's Consumer Price Index (CPI), which measures the average change over time in the prices paid by urban consumers for a "market basket" of consumer goods and services.
Largely in line with a forecast by Bloomberg, which expected the CPI to have risen by 5.1 percent year-on-year in March 2023, the all items index increased 5.0 percent over the last 12 months. The CPI rose 0.1 percent in March on a seasonally adjusted basis, down from increasing 0.4 percent in February. That means that inflation has now eased to its lowest level since May 2021 and a far cry from the 6 percent recorded in February.
Yet "core" CPI—which covers inflation of all goods and services except volatile food and fuel prices—has increased by 5.6 percent year-on-year in March. That means that inflation remains high enough that the Federal Reserve might once again raise interest rates during its next policy meeting in early May.
The Fed has been battling rising inflation for about a year now, and has recently decided in favor of a quarter-point rate rise—its ninth consecutive rate rise and the highest since 2007—in March despite the uncertain situation of the financial market following the collapse of Silicon Valley Bank (SVB).
As the bank's meltdown fueled anxiety over the fate of other regional banks and the entire banking sector, many expected the Fed to either lower its planned interest rate rise or suspend its year-long streak of interest rate hikes. But the Fed didn't budge.
It's unclear if the Fed will change its mind in May, and actually consider that there's no need for another increase due to the credit crunch that followed the collapse of SVB and the banking crisis. Last month, officials said that no cuts are forecast until 2024.
Overall, the situation in the U.S. is now much better than it was last year. Inflation has been easing for nine months now, giving some relief to American consumers. But it remains much above the Fed's target, at 2 percent.
Later on Wednesday, the Fed will release the minutes of its March meeting, which are expected to offer some insights into what the central bank will decide in May.
Newsweek has contacted the White House for comment by email.
Update, 4/12/2023 8:35 a.m. ET: This article has been updated to include the data released from the U.S. Bureau of Labor Statistics.
About the writer
Giulia Carbonaro is a Newsweek reporter based in London, U.K. Her focus is on the U.S. economy, housing market, property ... Read more