I've attached two images visualizing the March CPI report, breaking down the CPI into its components. The first image is month-over-month and the second is year-over-year. As many of us know, the March CPI was hot. It came in hotter than expected and is being driven by shelter (stubbornly staying high) and energy inflation (rising). Two follow-up thoughts: 1. Shelter inflation remaining hot breaks a lot of analysts hopes of shelter cooling down quickly this year to bring overall inflation down. 2. Energy inflation will likely continue to soar as global geopolitical conflicts worsen and oil prices continue to climb.
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ELI5 please?
March CPI report showed that inflation is not cooling down, and in fact getting hotter. The Fed's (US central bank) probably greatest mandate is to control inflation. When inflation is high, it can raise interest rates to bring it down. Raising interest rates hurts economic growth, but uncontrolled inflation hurts economic growth even more. Inflation is currently being driven by shelter costs (housing and rent) not falling as fast as many expect they would and energy prices (oil prices have been rising a lot recently). Because of this, it seems that inflation will continue to stay elevated for the next few months. This is bad news for the economy since the Fed will likely have to keep interest rates high for a lot longer than many expect, and in the worst case even raise them. Hope this helps!