The latest inflation report from the Labor Department estimated that the rate of consumer price increases slowed in March. The data released on Wednesday confirms that the Consumer Price Index increased by 5% in March, on a year-on-year basis. The February year-on-year CPI stood at 6%.
Much of the cooling in price increases has been attributed to declining gas prices earlier in the year. However, recent news from OPEC+ confirmed the oil-producing cartel’s plans to lower production, which could send gas prices spiraling upwards yet again. Indeed, that upward momentum in fuel prices has already been seen throughout much of the country in recent days.
The latest data shows that inflation is continuing to outpace the rate of wage growth in the United States, despite low unemployment and steady employment growth. And though the current administration continues to suggest that the declining rate of price increases has provided “breathing room” for the average working American, a recent survey from CNBC paints an altogether different picture.
According to that survey, about 70% of Americans report increased financial stress—mainly due to factors like inflation, uncertainty about the economy, and the increased cost of obtaining financing. Perhaps more alarming, about 58% of those Americans say that they are now surviving from paycheck to paycheck. In addition, Americans’ financial health has declined from 64% to just 55%–in just one year.
Meanwhile, most experts expect the Federal Reserve to raise interest rates one more time, by another 25 basis points, when they meet next month. Many observers expect them to pause any additional rate hikes at that point, while others expect them to even start cutting those rates in late 2023 if the economy suffers a downturn. Much of that decision-making is likely to depend on next month’s inflation report.