March Inflation Falls, But Won’t ‘Provide Much Comfort to Businesses’

With help from falling energy prices, annual inflation fell in March, new data out today shows. But the impacts from President Donald Trump’s tariffs are still looming and putting a damper on employers’ confidence.

The consumer price index (CPI) for March decreased 0.1% on a monthly basis and rose 2.4% for the 12 months ending in March, the U.S. Bureau of Labor Statistics (BLS) reported April 10. That’s down from the 2.8% year-over-year increase notched in February. 

Although annual inflation fell, the core CPI inched up 0.1% for the month — following a 0.2% increase in February — and 2.8% annually. The annual rate is also down from the month prior.

The index for energy fell 2.4% in March, as a 6.3% decline in the index for gasoline more than offset increases in the indexes for electricity and natural gas, the BLS reported. The food index, however, rose 0.4% in March as the food at home index increased 0.5%, and the food away from home index rose 0.4% over the month.

Although the CPI report shows moderation, that news doesn’t provide much relief as economic uncertainty is high, said Justin Ladner, senior labor economist at SHRM. Significantly, the latest CPI numbers likely do not yet reflect the tariffs, which economists say may impact inflation in the coming months.

“Like so many other economic indicators, the CPI is a lagging indicator of actual inflation, which is a problem when conditions are evolving rapidly — as is currently the case, largely due to new tariff policies and the looming threat of a large-scale global trade war,” Ladner said. “In some ways, the [CPI] report has been overtaken by events, and news that inflation moderated in March will not provide much comfort to businesses or policymakers. The broad expectation is that tariffs will drive prices higher in the near future, and this belief will play a powerful role in decision-making — at least in the short term.”

In general, Ladner said, there is an “incredibly high uncertainty regarding future conditions.”

“The market volatility over the last week has demonstrated the magnitude of this uncertainty,” he said, “and it should be noted that sustained uncertainty of this kind is economically damaging in and of itself.”

Real Earnings Pick Up

Real average hourly earnings for all employees increased 0.3% from February to March, seasonally adjusted, the BLS also reported April 10. This result stems from a 0.3% rise in average hourly earnings combined with a 0.1% decrease in the CPI.

Real average weekly earnings rose 0.3% over the month due to the change in real average hourly earnings combined with no change in the average workweek. 

Meanwhile, real average hourly earnings increased 1.4%, seasonally adjusted, from March 2024 to March 2025, the BLS said. The change in real average hourly earnings, combined with a 0.6% decrease in the average workweek, resulted in a 0.8% increase in real average weekly earnings over this period.