Consumer prices fell for the first time in five years, or rather, the government index of prices fell. The price of eggs and auto insurance is still high, among other necessary items we buy. The CPI index declined 0.1% in March, which helped bring down the year-over-year rate to 2.4%, the lowest level in four years. Core CPI, which excludes food and energy, rose 2.8%, also the lowest level in four years. The slowdown in inflation came from a decline in energy costs, used cars prices, airfares and vehicle insurance. Service prices, excluding housing and energy, fell the most in five years. Unfortunately, two of the stickier components in the index, grocery costs and owner’s equivalent rent (the metric for housing costs), increased again – signaling there are still significant price pressures for consumers. 

The CPI report gave the financial markets and Federal Reserve officials the chance to breathe a much-needed sigh of relief after months of seemingly stuck inflation. However, the battle against inflation is not over, especially with tariffs looming over the country. The March CPI report showed little impact of the tariffs already in place. The most recent round of announced tariffs has been put on hold for 90 days to allow for our trading partners and the U.S. to negotiate fairer deals. Yet even that is not a given and could change at any time. In the meantime, the current U.S. tariffs on goods from China have risen to 145%. Any relief felt from the current CPI report could be short lived. 

KEY INDICATORS THIS WEEK

Consumer Sentiment – The tariff and financial market upheavals are not sitting well with consumers. The latest University of Michigan consumer sentiment survey fell 11% this month to 50.8, the lowest measure since 2022. The decline was universal across age, income, education and political preference. One and five-year inflation expectations soared to the highest levels in decades. The survey showed a deterioration in consumers' outlook on their financial situation, with increased worries about job losses, income losses and higher unemployment rates.

Farewell – I would like to take this opportunity to thank you for your loyal readership and to say farewell. After a wonderful 21-year career with credit unions I am taking this opportunity to retire and see what the next phase of my life brings. I have thoroughly enjoyed working with every one of you and doing my best to help your credit union succeed. I hope these weekly newsletters have been educational, enlightening and entertaining for you. Behind the Numbers will continue with another person at the keyboard doing their best to keep you informed and entertained. Good luck to you and your credit union in the future.