Inflation Research Brief

CPI slows, though trade policy clouds the outlook. Headline CPI declined 0.1 percent month over month in March—the first monthly decrease since 2020—easing the year over year rate to 2.4 percent. Core inflation edged down to 2.8 percent year over year, its lowest level since March 2021, further tapering price pressures. Nevertheless, ongoing trade policy developments may threaten this progress, as elevated import barriers that took effect in April could disrupt economic momentum and price stability. Although the temporary hold on reprisal tariffs is expected to reduce the immediate impact, the average effective tariff rate remains above 25 percent—far exceeding the pre-2025 norm of roughly 2.5 percent. While subject to change, the resulting cost pressures could erode business confidence and weigh on consumer spending as firms adjust pricing strategies.