Inflation likely cooled last month as businesses braced for higher
tariffs
[April 10, 2025] By
CHRISTOPHER RUGABER
WASHINGTON (AP) — Inflation likely declined last month as the cost of
energy, used cars and hotel rooms may have fallen, though President
Donald Trump's remaining tariffs could lift prices soon.
Consumer prices probably rose 2.6% in March from a year ago, the Labor
Department is expected to report Thursday, according to economists'
projections compiled by FactSet. That would be down from February's
yearly gain of 2.8%. Excluding the volatile food and energy categories,
prices are expected to have risen 3%, down from 3.1% in February.
The projected figures, if accurate, would suggest inflation is starting
to cool again after remaining elevated for most of the fall and winter.
Core inflation was stuck at 3.3% for five months before declining in
February.
Still, inflation remains above the 2% target set by the
inflation-fighters at the Federal Reserve. And on a monthly basis, core
prices are forecast to rise 0.3% in March. If sustained, price increases
at that pace would easily top the Fed's target. Overall prices are
expected to tick up just 0.1% in March, however. Economists pay closer
attention to the core figures because they provide a better guide to
where inflation is headed.
Most economists had forecast higher inflation this year as a result of
the sweeping tariffs on 60 nations that President Donald Trump announced
last week. Yet on Wednesday, Trump paused those duties for 90 days. A
universal tariff of 10% remains in place, as well as 25% duties on
steel, aluminum, cars and many items from Canada and Mexico.
And import taxes on China have been ramped up to 125%, after China
retaliated against Trump's earlier decisions to place large duties on
imports from China.
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 Even with the pause, many companies
are still uncertain where trade policy will go next. Trump has also
said that duties on pharmaceutical imports will be imposed.
Consumers will likely see some prices rise because of the existing
duties, including the massive tariffs on China. The United States
imports more than $60 billion of iPhones and other mobile phones
every year from China, as well as massive amounts of clothes, shoes
and toys.
Many U.S. companies will likely shift production out of China, a
process that had already started during Trump's first term when he
slapped duties on some of its exports. Still, China remains the
Unite States' third-largest trading partner.
Shifting supply chains out of China, however, will likely take time
and come with its own costs, which could raise prices for U.S.
consumers in the coming months.
Last week, Federal Reserve Chair Jerome Powell said that the central
bank was likely to keep its key interest rate unchanged at about
4.3% as it waited to see how Trump's policies impacted the economy.
Trump called for the Fed to cut rates on Friday.
“There’s a lot of waiting and seeing going on, including by us,”
Powell said. “And that just seems like the right thing to do in this
period of uncertainty.”
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