Thursday’s inflation report is expected to show the Consumer Price Index (CPI) increased 2.5% in March, down from 2.8% in February and the lowest annual rate since September. Much of the drop is attributed to lower energy costs, indicating that the elevated post-pandemic inflationary pressures are easing.
Economists caution that this improvement could be temporary. Recent tariff announcements from the Trump administration may be pushing some prices higher. Tariffs implemented in March on certain Chinese goods could already be filtering into consumer prices, and further levies on cars, steel, aluminum and other imports were scheduled to take effect in April.
Forecasts vary depending on how broadly and persistently tariffs are applied. UBS modelers have warned that, if a full set of tariffs remains in place, inflation could accelerate toward 5%. Other analysts, however, expect negotiations and exemptions to limit the impact, so the ultimate effect on inflation may be more modest than worst-case projections suggest.
In short, March’s lower CPI reading reflects easing energy-related pressure, but trade policy developments introduce uncertainty. Market participants and policymakers will be watching upcoming price data closely to see whether the disinflation trend continues or if tariff-related cost increases begin to reverse it.