Annual inflation proved to be hotter than expected last month, staying stubbornly above 3%. It continues to move in the wrong direction in recent months. Pushing it lower is proving to be hard.
A customer shops at a grocery store in Chicago on Feb. 13, 2024. Annual inflation has eased significantly since two years ago but it has remained stubbornly above 3% this year.
Data released on Wednesday showed consumer prices moving in the wrong direction once again, rising 3.5% in March from a year earlier, a little hotter than the 3.4% rise economists had predicted.Become a KPBS sponsorInflation at these levels is still significantly better than it was two years ago, when it peaked at a decades-high of 9.1%.
And for the Fed it poses a dilemma: Policymakers have made clear they want to see inflation moving more consistently towards its 2% target before it starts cutting interest rates.It's hard to say when that will happen. Though there are promising signs, they are not conclusive yet. "We do not expect that it will be appropriate to lower our policy rate until we have greater confidence that inflation is moving sustainably down toward 2%," Fed Chair Jerome Powell said in a speech this month at Stanford University.There are several factors contributing to keep annual inflation above 3% — and they shouldn't be particularly surprising to anyone.
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