U.S. consumer prices fell in March, pushed down by a decline in the price of goods and defying predictions that President Trump’s tariff plans would push up prices. This was the first drop in consumer prices in nearly three years and only the second decline since inflation accelerated under Joe Biden to the worst rates in decades.
The consumer price index fell by 0.1 percent compared with the previous month after climbing each month since July 2022. Economists had forecast prices would rise by 0.1 percent.
Core consumer prices, a measure that excludes volatile food and energy prices, rose by 0.1 percent, far less than the 0.3 percent expected. This was the smallest rise in core prices since President Trump’s first term as president.
The fall in prices marks a significant political victory for Donald Trump, who said on the campaign trail that he would bring down consumer prices.
“Starting on day one, we will end inflation and make America affordable again, to bring down the prices of all goods,” Trump said.
Economists were skeptical that prices would fall, often arguing that while the rate of price increases might decline, it was unlikely the absolute price level would decline. The March report demonstrates Trump was right that prices could be brought down.
Energy prices fell by 2.4 percent in the month, led by a 6.3 percent decline in gasoline prices.
It was not all good news. Food prices rose sharply, including egg prices. Grocery climbed 0.5 percent and dining out prices increased 0.4 percent.
Consumers saw lower prices for airline fares, motor vehicle insurance, used cars and trucks, and recreation. Prices for new cars rose 0.1 percent and are flat with a year ago. Clothing prices rose 0.4 percent, a slowdown in inflation from the prior month’s 0.4 percent increase. The prices of smart phones fell by 1.1 percent.
Core goods prices fell 0.1 percent in the month. Core services prices rose 0.1 percent, the smallest increase since August 2021.
Compared with a year ago, the consumer price index is up 2.4 percent, the smallest annual since February 2021. Core prices are up 2.8 percent, the lowest rate of inflation since March 2021.
