Eggs are cheaper, but not housing? Inside the latest consumer price index
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Eggs are cheaper, but not housing? Inside the latest consumer price index
The economic headline of the day is the consumer price index, which measures inflation. And the big takeaway is that there isn’t one, big, clean takeaway.
Overall, things are looking better. Prices rose 5%, a slowdown from recent months and the slowest pace since May 2021. Some experts are optimistic.
“It feels like Americans are going to be seeing some relief in general,” said Naomi Blohm with Total Farm Marketing.
But some experts are a bit more pessimistic.
“In fact, I’m a bit more worried about the next couple of months after seeing what we saw today,” said Omair Sharif with Inflation Insights.
And there are those who land somewhere in between.
“I see clear positives with this report, but this wasn’t a slam dunk,” said Alan Detmeister at UBS.
Sticking to the positives now: Groceries were cheaper in March. Prices fell from the month before by 0.3%.
“Eggs actually [went] down just over 10%. Fruits and vegetables declined 1.3%,” Blohm said. “All the pieces are coming together and ultimately, definitely showing Americans some relief on some of their bills.”
This is great news for omelet lovers, but food and beverage prices are still up more than 8% compared to a year ago. And for those bills to keep coming down, luck is probably needed.
“We need the United States this summer to have a perfect spring planting,” Blohm said. “We need the farmers this summer to have perfect weather conditions because we still have tight supplies from a year ago.”
No pressure at all. Forget food then, because there’s also housing. The cost of shelter generally was up 0.6% in March. It’s not ideal, but better than the 0.8% increase in February.
“So, the fact that we’re starting to see some slowing in those is something we’ve been waiting for for many months,” Detmeister said.
But the dubbed pessimist, Omair Sharif, said there’s something fishy about the 0.6% rise in shelter costs.
“I’m very cautious about this particular number today,” he said. And why is that? “There’s elements of a lot of noise in this data.”
About a third of the rent growth slowdown came from big cities. And about half of that came from a drop-off in San Diego.
“When it’s that sort of unbalance, if you will, when one city alone is driving so much of the slowdown, that’s another reason to be pretty cautious about taking this cooling at face value,” Sharif explained. Because what’s happening in San Diego doesn’t really matter in San Antonio.
Switching back to positives: One of the harder parts of inflation to tame is services — this is everything from getting a haircut to business consulting. And services prices grew only 0.4% in March, down from 0.6% in February.
However, they’ve been going up and down in that range for months now and not really moving overall. But again, a big part of services is wages, and wage growth is slowing down. And yet again, there are some services where wages are not the driving factor, like auto insurance.
“Used cars, of course, cost more. Everyone’s out driving. There are more accidents on the road,” Sharif said. “And cars have more expensive parts. So, unfortunately some of the stickiness is inflation in other sectors seeping into other parts of the economy.”
Overall, things in the economy are looking great … but also not so great.
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