The annual rate of inflation in the US, as measured by the Consumer Price Index for All Urban Consumers (CPI-U), stood at 5.0% in March. This is according to data released by the Bureau of Labor Statistics this afternoon. Inflation on the CPI-U measure has now slowed for nine consecutive months since June’s peak of 9.1%. March’s month-on-month slowdown was the largest of that sequence, with inflation being 1.0 percentage point lower than in February. March’s reading also came in slightly lower than consensus expectations of 5.2%. 

The recent slowdown in the rate of inflation in the US has largely been driven by energy. Falling wholesale prices have been key, reducing the upward pressure on inflation from household bills. Indeed, energy’s contribution to March’s inflation rate was negative, with prices being down by 6.4% on the year. This reflects a base effect, given that energy prices began to escalate this time a year ago, as a consequence of Russia’s invasion of Ukraine. Within the energy category, particularly stark annual deflation was seen for motor fuels, for which prices fell by 17.4% on the year. Some energy subcategories continue to see annual price growth, however. For instance, electricity prices were up by 10.2% on the year in March, more than twice the headline rate of inflation.

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