Finance

Here’s the inflation breakdown for March 2025 — in one chart

Published

1 month ago

April 10, 2025

David Paul Morris/Bloomberg via Getty Images

Inflation throttled back in March, largely on the back of lower gasoline prices — but tariffs threaten to reverse that downward trend in coming months while trouble also lurks in certain categories like groceries, economists said.

The consumer price index rose 2.4% for the 12 months ended in March, down from 2.8% in February, the U.S. Bureau of Labor Statistics reported Thursday, indicating that inflation decelerated.

Additionally, “core” CPI — a measure that strips out food and energy prices, which can be volatile — fell from 3.1% to 2.8%, the lowest level since March 2021. Economists prefer to look at core inflation to determine underlying inflation trends.

However, there are trouble spots like grocery prices and the Trump administration’s economic policy poses a significant headwind, economists said.

“It would have been a really good day,” Mark Zandi, chief economist at Moody’s, said of the CPI report. “But because of the tariffs, the trade war, it means nothing.”

He added that “it doesn’t reflect any of the tariffs being slapped on products around the world, particularly those coming from China.”

The consumer price index is a widely used measure of inflation that tracks how quickly prices rise or fall for a basket of goods and services, from haircuts to coffee, clothing and concert tickets.

CPI inflation has declined significantly from its pandemic-era high of 9.1% in June 2022.

However, it remains above the Federal Reserve’s target. The central bank aims for an annual rate around 2% over the long term.

Why tariffs raise prices

Tariffs, a tax paid by U.S. importers, add costs for businesses that ultimately get passed to consumers, economists said. Steel tariffs, for example, could make steel-intensive items like cars, homes and machinery more expensive, they said.

Tariffs “are going to be the main driver of inflation surging this year,” said Thomas Ryan, an economist at Capital Economics.

President Donald Trump on Wednesday backed down from imposing steep tariffs on dozens of trading partners, following a stock-market rout and surging U.S. government bond yields, which push down bond prices.

While Trump delayed so-called “reciprocal tariffs” for 90 days, all U.S. trading partners still face a 10% universal tariff on all imports. The exceptions — Canada, China and Mexico — face separate levies, however.

Imports from China are subject to a 125% tariff, for example. In response, China put 84% retaliatory tariffs on U.S. exports. Trump has also imposed product-specific tariffs on aluminum, steel, and automobiles and car parts.

“Many products that the U.S. imports are predominantly from China. Smartphones [73%], laptops [78%], video game consoles [87%], toys [77%], and also antibiotics for U.S. livestock production,” Wendong Zhang, professor of applied economics and policy at Cornell University, wrote in an e-mail to CNBC. “Resourcing from other countries will take time and result in much higher costs.”

Trump’s tariff policy will push the U.S. inflation rate to a peak around 4% by the end of 2025, Capital Economics estimates. That’s roughly double the Fed’s long-term target.

Vanguard Group projects a similar rise in inflation, particularly for goods prices. The money manager forecasts a 4% full-year 2025 inflation rate due to U.S. tariffs and retaliation by other nations.

Economists question whether the inflation impact will be short-lived (akin to a one-time price shock) or something more persistent.

Housing disinflation ‘set in stone’

Inflation was expected to continue its gradual decline in 2025 absent Trump’s economic policy, said Preston Caldwell, chief U.S. economist at Morningstar.

The trajectory of housing inflation is a major driver of that disinflationary trend, he said.

Inflation rate falls to 2.4% in March, lower than expected

Shelter is the largest component of the consumer price index, and therefore has an outsized impact on the direction of inflation. Annual shelter inflation eased to 4% in March, the smallest 12-month increase since November 2021, according to the BLS.

Housing disinflation is “something that’s sort of set in stone, at this point,” Caldwell said.

Gasoline prices tumble

Gasoline prices also tumbled in March. Prices at the pump declined 6.3% from February to March, after an adjustment for seasonal factors, according to the BLS.

Seasonally adjusted prices are down about 10% over the past year.

Oil prices plunged in early April, tied to fears of a global recession crimping demand, and gasoline prices are expected to throttle back further if the trend continues, economists said.

Groceries are a trouble spot

Trouble spots do remain, however.

Food prices were “the significant blemish” in the CPI report, particularly those for groceries, Zandi said.

According to BLS data, grocery prices rose 0.5% in the month from February to March, up from 0% the prior month, which is higher than the roughly 0.2% monthly move that economists say is needed to reach the Fed’s annual inflation target.

Egg prices jumped about 6% for the month and are up 60% in the past year, according to BLS data. That jump is largely attributable to a U.S. outbreak of bird flu, which has killed millions of egg-laying chickens and crimped egg supply.

Fed's Kashkari: Fed's first priority must be keeping long-term inflation expectations anchored

Prices for instant coffee have also surged, about 13%. Weather patterns like droughts fueled by climate change have disrupted major coffee growers like Brazil, reducing supplies of coffee beans.

However, the broad increase in grocery prices isn’t attributable to one factor or agricultural product, Zandi said.

It’s “worrisome” that food inflation has picked up even as diesel prices have fallen, a dynamic that would generally serve to hold down inflation due to lower transportation costs to grocery shelves, Zandi said.

“This inflation report had some highlights, and continues to have problem areas in food prices and energy components like electricity and natural gas,” Greg McBride, chief financial analyst at Bankrate, wrote Thursday morning. “But all this is looking in the rear-view mirror. With both inflation and the overall economy, uncertainty abounds about what might be lurking around the bend.”

Finance

Stocks making the biggest moves premarket: Nvidia, Best Buy, Eli Lilly, Tesla, Amazon and more

Published

3 hours ago

May 12, 2025

Business Finance News

These are the stocks posting the largest moves in premarket trading.

Finance

Investor Ric Edelman reacts to crypto ETF boom

Published

2 days ago

May 10, 2025

Business Finance News

Ric Edelman cuts through crypto confusion specifically for the long-term investor

Bitcoin’s milestone week comes as new crypto exchange-traded funds are hitting the market.

Investor and best-selling personal finance author Ric Edelman thinks the rollout gives investors more access to upside.

He finds buffer ETFs and yield ETFs particularly exciting.

“You can now invest in bitcoin ETFs that protect you against the downside volatility while preserving your ability to enjoy the upside profits,” Edelman told CNBC’s “ETF Edge” this week.” You can generate massive amounts of yield, much more than you can in the stock market.”

Edelman is the founder of the Digital Assets Council of Financial Professionals, which educates financial advisors on cryptocurrencies. He is also in Barron’s Financial Advisor Hall of Fame.

“Crypto is meant to be a long-term hold, just like the stock market,” said Edelman. “It’s meant to diversify the portfolio.”

His thoughts came as a bitcoin rally got underway. The cryptocurrency crossed $100,000 on Thursday for the first time since February. As of Friday’s close on Wall Street, bitcoin gained 6% this week. It is now up almost 10% so far this month.

However, Edelman sees problems when it comes to leverage and inverse bitcoin ETFs. He warned that not all crypto ETFs are appropriate for retail investors, suggesting most don’t understand how they work.

‘Same thing as buying a lottery ticket’

“These leveraged ETFs often have an assumption you’re going to hold the fund for a single day, a daily reset,” he said. “That’s literally the same thing as buying a lottery ticket. This isn’t investing.”

During the same interview, “ETF Edge” host Bob Pisani referenced 2x Bitcoin Strategy ETF (BITX) as an example of a leveraged bitcoin product that includes daily fees and resets.

The fund is beating bitcoin this week, jumping more than 12%. So far this month, the ETF is up 19%. But the BITX is underperforming bitcoin this year. It is up about 1.5%, while bitcoin is up roughly 10%.

Volatility Shares is the ETF provider behind BITX.

The company writes on its website: “The Fund is not suitable for all investors … An investor in the Fund could potentially lose the full value of their investment within a single day.”

Finance

America failing its young investors, warns financial guru Ric Edelman

Published

2 days ago

May 10, 2025

Business Finance News

Legendary investor Ric Edelman on why financial literacy hasn't improved in a generation… and what can be done.

One of the most recognized names in personal finance is urging Americans to increase their financial literacy, and urging the country to do a better job of providing the education.

“We spend a lot of time trying to improve financial literacy. We stink at it,” said Ric Edelman, founder of Edelman Financial Engines, on this week’s CNBC “ETF Edge.”

Edelman believes the problem is rooted in the fact the U.S. has never had a great tradition of encouraging smart personal finance, and he says it has never been more important to fix, given how long people are now living. That increases the risks related to running out of money later in life and creates serious questions about standard investing models for long-term financial security, such as the 60-40 stock and bond portfolio.

“We are the first generation, as baby boomers, that will live long lives as part of the norm,” Edelman said. “Everyone before us, our parents and grandparents mostly died in their 50s and 60s. You didn’t have to plan for the future, because you weren’t going to have one,” he added.

One of his biggest concerns with the current generation of young investors is that they seem to believe in get-rich-quick schemes. Many of the new investing websites have been too encouraging of risky strategies that lure young investors in, he says, promoting financial gambling rather than investing. Options and zero-day options have become a significant part of the daily trading landscape in the last several years. According to data from the New York Stock Exchange, the percent of retail traders participating in the options market approached the 50% mark in 2022. In 2024, options volume hit an all-time record.

Edelman says younger generations should be wary of a corporate America that makes consumer finance more complicated than it should be, which includes the manufacturing of overly sophisticated and expensive financial products. “They want to make it complex, to make you a hostage rather than a customer,” he said.

He also cautions young investors to make sure they are getting information about personal finance from credible sources. “When so many are getting their financial education from TikTok, that’s a little scary,” he said.

Edelman believes the cards are stacked against young investors because of the lack of high schools mandating a course in personal finance. “The only way we discover the issues of money is through the school of hard knocks as adults, and we’re over our heads when it comes to buying a car, getting a mortgage, insurance and saving for college” he said.

That situation is improving for the next generations of adults. Utah was the first state to require a personal finance course for high school graduation in 2004, and the list grew to include 11 states by 2021. As of this year, 27 states now require high school students to take a semester-long personal finance course for graduation, according to Next Gen Personal Finance.

Another big challenge for young investors is they often don’t have a lot of money to invest, with many recent college graduates struggling to pay bills and left with little to put towards other financial goals. But there is at least one reason to be hopeful about younger Americans, Edelman says: they are highly motivated to reach financial success.

“Today’s youth looks at their parents and sees how poorly they were prepared for retirement. They don’t want that to be their future” he said.