Inflation Eases in March—But Tariff Pressures Are Just Getting Started

The March Consumer Price Index (CPI) report showed overall inflation eased slightly, with the CPI-U declining 0.1% on a seasonally adjusted basis, marking the first monthly decline since October 2023. Over the past 12 months, inflation rose 2.4%, down from 2.8% in February.

A 6.3% drop in gasoline prices drove most of the decline, pulling the energy index down 2.4%. However, food prices told a different story. The food index rose 0.4%, with the food-at-home category up 0.5%. Meat, poultry, fish, and eggs saw a 1.3% monthly increase, driven by a 5.9% jump in egg prices and a 1.2% rise in beef. Over the past year, eggs are up a staggering 60.4%, and meat prices continue their upward climb.

While these numbers show short-term relief in overall inflation, long-term concerns remain. The report landed just after a 90-day pause on reciprocal tariffs was announced, offering temporary breathing room for global trade. However, 10% baseline duties on most imports are now in effect, with higher levies on Chinese goods and ongoing duties on key sectors like steel, aluminum, and autos.

Economists warn that the potential tariffs will likely accelerate price increases in the coming months, particularly on imported goods. For grocers, that means closely watching costs—not just on food, but packaging, equipment, and other operational inputs.

Claudia Sahm, former Federal Reserve Board economist and current chief economist at Century Advisors, told Yahoo Finance, “This could easily be the last really good CPI day for a while. The tariffs that have gone into effect, [but] it’s going to take time for it to show up in the data.”

Sources:

Bureau of Labor Statistics
Yahoo Finance