On April 10, 2025, the U.S. Bureau of Labor Statistics (BLS) released the Consumer Price Index (CPI) data for March, showing signs of easing inflationary pressure, with a complex market reaction. 

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📉 Overview of March CPI Data

• Monthly Change: CPI decreased by 0.1% compared to February, marking the first monthly decline since May 2020, primarily influenced by falling oil and airfare prices. 

• Annual Change: The annual growth rate fell to 2.4%, below the market expectation of 2.5%, setting a new low since the pandemic. 

• Core CPI (excluding food and energy): Monthly change was only 0.1%, and the annual growth rate fell to 2.8%, the lowest in four years. 

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🛢️ Price Change Details

• Items Decreasing:

• Gasoline prices fell by 6.3%. 

• Airfare prices fell by 5.3%.

• Items Increasing:

• Food prices slightly increased. 

• Housing costs rose slightly. 

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⚠️ Inflation Outlook and Risks

Despite the inflation data showing easing, economists warn that recent high tariff policies by the U.S. against countries like China may push inflation up again. Current tariffs on Chinese goods exceed 100%, while tariffs on other countries remain around 10%. If tariffs persist, the inflation rate may rise back to 4%, complicating the Federal Reserve's decision-making process. 

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📉 Market Reaction and Federal Reserve Policy Outlook

• Stock Market: After news of a tariff pause, market sentiment briefly improved, but following the CPI release, stock futures fell, reflecting market uncertainty about future inflation.

• Federal Reserve Policy: The market has lowered the likelihood of a rate cut by the Federal Reserve in May to 17%, but the probability of a rate cut in June remains as high as 74%. 

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