By Jim Cline
The latest inflation numbers raises further questions about whether the CPI will continue to decline quickly below 3% as had been predicted. The Bureau of Labor Statistics released US All Cities inflation numbers for March this past Wednesday. Both the National “W” and “U” March indices were reported at 3.5%. That is an increase over the respective 3.1% and 3.2% numbers reported for February.
The Seattle and other regional indices are reported bi-monthly so there are no number March numbers to report there. In our most recent about the February CPI article we suggested:
The last few months of data suggest that inflation might be at least temporarily plateauing. These latest numbers also show that the downward trajectory that had the numbers heading closer to the Fed target of 2% is not yet materializing.
These numbers suggest that what had been a downward trend in inflation is stalling above 3% (and higher for Metro Seattle inflation). As the Wall Street Journal explained the situation:
By all measures, inflation has eased substantially since its peak in mid-2022, when CPI data showed that prices had climbed roughly 9% from a year earlier. But Wednesday’s report reignited fears that the proverbial “last mile” of the inflation fight will be challenging. For example, core CPI had declined on a 12-month basis in every month since March 2023, when it stood at 5.6%, but that streak was broken with the latest price data.
The effect on the stock market this week was predictable. The market declined because it’s becoming clearer that the Fed won’t be reducing interest rates any time soon, and until there’s a clear reduction in inflation.
The larger story here is that most data suggest overall the economy is very strong, and the labor market is certainly very tight with unemployment at records lows and still declining. In a future article, we’ll cover broader developments in the economy and how they may impact labor contract negotiations. But at least as to this report, there are more and more indications that the mid-year CPI data that will impact 2025 negotiations will show national inflation above 3% and Seattle Metro inflation likely above 4%.
