A new US inflation report is expected to show a slight decline in price growth in March, but analysts say the outcome that suggests that such a slowdown is probably not very meaningful.
On Thursday, the Bureau of Labor Statistics released consumer price data for the last month, with forecasters predicting that inflation has been etched slightly.
The decline will provide most of a break from continuing concern that prices will rise in the coming months, even after President Donald Trump’s unprecedented tariff plans eased it on Wednesday.
“General (tax) rates are not entirely different given how much the president has increased China’s tariffs,” BNP Paribas US economist Andy Schneider told NBC News after relaxing Trump’s surprise announcement.
Even before Trump’s shock tariff announcement on April 2nd, investors were predicting some preparation for consumer costs.
Analysts at BNP Paribas wrote this week that they wrote in a note to their clients. This has found that 80% of respondents say that if prices rise following an increase in input costs, the increase is at least equal to the amount of cost hiking, an analyst at BNP Paribas wrote in a note to clients this week.
“These findings show a widespread impact and the majority of affected businesses are likely to pass increased costs to consumers,” the analyst wrote.
The suspension announced Wednesday means that economic fallout from Trump’s plans may not be as serious as feared, but the Wall Street company continues to predict a dramatic slowdown in the economy as a result of the entire episode.
In a memo to clients following the announcement of Trump’s suspension on Wednesday afternoon, Goldman Sachs analysts still forecast a 45% chance of a recession, predicting economic growth in 2025 rose to 0.5% and 12-month inflation to 3.5%.
So, while the improvements seen in Thursday’s report could be largely ignored, the price rise will be seen as a taste of what comes as the economic impacts from tariffs bite.
Trump wrote this week on his true social platform that there is “no inflation” as oil prices and food prices are falling.
That’s an extraordinary view. It has not been shared by Trump’s own Treasury Secretary. He recently admitted on NBC News’ Meet the Press that there was a “one-time price adjustment” from tariffs, but did not predict that “inherent inflation” would last.
In comments last week, Federal Reserve Chairman Jay Powell warned that inflation from tariffs could prove to be more durable than the administration hopes.
“We face a very uncertain outlook with an increased risk of both higher unemployment and higher inflation,” he said at an event in the Washington, D.C. “Taxes are very likely to generate at least temporary rises in inflation, but the impact could also be more sustained.”
The reprieve at the pace of price growth, Barclays Private Bank said in a memo, will allow the Fed to have several breathing rooms to better manage the financial situation Trump has imposed. Without it, it will continue to be captured between stabilizing the economy and responding to Trump’s policies.
“We are pleased to announce that Julien LaFarg, Chief Market Strategist at Barclays Private Bank,” said: