From Relief to Reality Check: Tariffs Poised to End CPI’s Brief Lull

The March Consumer Price Index may wind up being a snapshot for wistful consumers — a look back at what was, before tariffs took root and roiled global trade, and inflation re-ignited.

The headline inflation rate notched its lowest level in four years. However, the data came ahead of the April 2 “Liberation Day,” and massive tariffs imposed on dozens of U.S. trading partners. As of Thursday morning (April 10), there’s a 125% rate charged to China, which in turn hiked tariffs on U.S. goods to 84%. In other words, there are going to be costs passed along to consumers.

Those costs and price hikes are uncertain and unquantified. In one example of just how fluid things are, Bloomberg reported Wednesday (April 9) that Walmart is tasking parts of its China-based supply chain to leave stickers off of some items, which leaves room to hike prices. Other firms are suspending orders for raw materials and inputs to their products. Should the pauses remain in place, the impact on retailers and other merchants may be one where goods are in short supply, which also drives up prices.

Consumers have already been retrenching. As Karen Webster noted in a column this week, nearly 78% of consumers across “all major retail categories of spend — clothes, food, health and beauty, personal services, household and tech/digital services — are rethinking what they buy and how much they are willing to spend when they do. Tech purchases, eating out and buying coffee at the local coffee shop are consistently on the chopping block, even for those who do not feel financial pressures.”

Consumer prices decreased by 0.1% on a seasonally adjusted basis in March, following a 0.2% increase in February, per CPI data. Over the past year, the all-items index rose 2.4% unadjusted, a slowdown from the 2.8% increase recorded in February.

For the first quarter of 2025, the CPI rose 1.3% unadjusted, marking the lowest first-quarter increase since 2019.

The prime mover here has been energy prices, which declined by 2.4% in March, led by a 6.3% drop in gasoline prices, which offset increases in natural gas (3.6%) and electricity (0.9%).

However, the staples of daily life are still on the rise. Food prices rose 0.4% in March, with the “food at home” index increasing 0.5%. This rise was primarily driven by a 5.9% increase in egg prices and a 1.3% rise for meats, poultry, fish and eggs. Other changes included a 1.2% rise in beef prices and a 0.6% increase in nonalcoholic beverages.

Coffee, which is a key import, continued to rise and may portend a shift for java hounds. Instant coffee prices rose 0.9% in March, contributing to a 2.6% increase for the quarter and a 6.7% rise compared to March 2024.

Over the past year, the “food at home” index rose 2.4%, with egg prices surging by 60.4%.

Meanwhile, the “food away from home” index increased 3.8%, with full-service meals rising 4.1% and limited-service meals climbing 3.4%.

Personal care items rose 1% in March.

Airline fares declined 5.3%, which may or may not spur consumers to make summer travel plans. Delta Air Lines’ commentary from its most recent earnings call suggests some turbulence in the travel industry.

Over the past year, the core CPI increased 2.8%, with shelter rising 4%, the smallest annual increase since November 2021. On an unadjusted basis, shelter prices rose 0.2% in March.

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