Trump Economy: First Drop In Consumer Prices In Several Years

Yesterday’s Consumer Price Index report revealed inflation fell to 2.4% in March, smashing expectations for the second straight month, posting the first drop in consumer prices in several years.

Even CNN was forced to admit, “This was actually a DROP of .1% — that's the first time we've seen that since COVID. Year-over-year, the annual inflation rate was at 2.4%. This was also better than expected and a six-month low, moving in the right direction."

The March core inflation rate was the lowest since March 2021.

"The energy index decreased 3.3% over the past 12 months. The gasoline index fell 9.8% over these 12 months and the fuel oil index fell 7.6% over that period," the Bureau of Labor Statistics said.

• Prescription drug prices saw the largest monthly decline on record.

• Prices for airfare, used vehicles, and car insurance all decreased.

• Energy prices fell 2.4% in March, driven by plummeting gas prices across the country.

Barron’s reported economists surveyed by FactSet had expected core inflation to hit 3% for March, a pullback from February’s 3.1% reading. Core inflation is considered a better indicator of the trajectory of price growth and yesterday’s report was better then expected.

Core CPI also rose a mere 0.1% from February to March. That’s significantly slower than the 0.3% month-over-month pace economists had expected to see in March, according to estimates. In February, core inflation was 0.2%.

Morningstar reported the core CPI reading, meanwhile, showed prices rising a mild 0.1% in unambiguously good news. That was the smallest increase in nine months.

The core rate strips out volatile food and energy prices and is seen as a better predictor of future inflation.

The 12-month core rate decelerated to 2.8% from 3.1%, marking its lowest level in four years. The Federal Reserve is aiming to reduce inflation to 2%.

There was no clear evidence that prior threats or implementation of tariffs affected prices last month, wrote Jeffry Bartash.

"Trump's plan is working — energy prices are falling, which is causing lower transportation costs, while shelter inflation continues to moderate," said Seeking Alpha analyst Damir Tokic. "Current tariffs in place are unlikely to affect inflation significantly over the next three months during the negotiations, and this is positive for the stock market."

The White House released a statement trumpeting the good news saying, “President Trump is making good on his promise to deliver lower costs for Americans, with prices for everyday goods seeing across-the-board declines.

“As President Trump pursues the largest tax cuts in history, an unprecedented deregulatory agenda, and a manufacturing boom, the American economy is poised to prosper like never before.”

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