Inflation dipped again last month as expected by analysts to reach the smallest 12-month increase since May 2021, according to new data out Wednesday. But overall, cost of living is still running at a high pace, contributing to significant declines in employee financial and mental well-being.
The Consumer Price Index (CPI) for all items rose 5% for the 12 months ending in March, before seasonal adjustment, the U.S. Bureau of Labor Statistics (BLS) reported April 12. That’s down from the 6% annual gain seen in February and the 6.4% annual gain in January; it’s also significantly below the 9.1% high notched last June.
On a monthly basis, the CPI rose 0.1% in March, seasonally adjusted, after increasing 0.5% in February. Core inflation, excluding food and energy, rose 0.4% in March after rising 0.5% in February, the BLS reported.
The index for shelter was by far the largest contributor to the monthly all items increase. This more than offset a decline in the energy index, which decreased 3.5% over the month as all major energy component indexes declined, according to the BLS. The food index was unchanged in March with the food at home index falling 0.3%.
Meanwhile, real average hourly earnings decreased 0.7%, seasonally adjusted, from March 2022 to March 2023, the BLS reported separately Wednesday. The change in real average hourly earnings, combined with a decrease of 0.9% in the average workweek, resulted in a 1.6% decrease in real average weekly earnings over this period.
Despite the improvement being made with consumer prices, progress is still slow, with inflation running significantly higher than the Fed’s target rate of 2.0%. From 1960 to 2021, the average inflation rate was 3.8% per year.
