Inflation rose less than expected last month, adding to evidence that the Federal Reserve's rate hikes are finally having an impact.
The Consumer Price Index (CPI) rose 0.1% from February to March, below economists' estimated 0.2% and last month's 0.4%. Year over year, that number fell to 5%, down from 6%, according to information released Wednesday.
Transportation was the largest contributor to the increase, jumping 1.4%. That was followed by an increased price in shelter and medical care.
Long-suffering grocery shoppers got a break this month, as the price of food at home fell for the first time since September 2020 over the month, down 0.3%.
Prices for energy decreased last month, led by a 7.1% decrease in utility gas, followed by a 4.6% drop in the price you pay at the pump.
This could be an encouraging sign that the economy is finally succumbing to the impacts of the Fed's campaign of rate hikes designed to combat inflation. Pared with the recent jobs report that economists touted as the "just right" amount of jobs added, there is renewed optimism that inflation could be tamed without widespread job loss.
Janet Yellen mirrored that sentiment yesterday on the sidelines of the World Bank meetings, saying she was not anticipating a recession in the near future. The treasury secretary and former head of the Federal Reserve cited strong job growth and lowering inflation as reasons why she felt the U.S. economy could still achieve a soft landing.
Traders, however, are still overwhelmingly pricing in a 25 basis point increase in interest rates at the Fed's next meeting in May, according to CME Group's FedWatch tool.