In March, the latest consumer price index (CPI) data released by the government showed a 2.8% rise. This increase is against the backdrop of spring 2021. This deceleration offers encouraging signs after recent concerns that inflation had become entrenched and wouldn't fall back to the Federal Reserve's target. Though overall inflation is down, some products, such as eggs, are still seeing large price increases, leading to investigations by regulators.

This decline in the CPI from 3% in January indicates a continued moderation in price pressures throughout the economy. This change in fortune is very good news for the Federal Reserve. Long term, they are aiming for a 2% annual rate of inflation. This decline from a pandemic-era peak of 9.1% in June 2022 is a sign of remarkable progress in taming inflation.

Shelter inflation, accounting for over 30% of the CPI, was the biggest culprit in February’s deceleration. Annual inflation for shelter was 4.2%, its lowest since December 2021. Because shelter costs will be central to determining overall inflation readings, the recent downturn in these costs is so important for helping reduce inflationary pressures throughout the economy.

Housing inflation is historically the 'stickiest' component of inflation, meaning it takes longer to buck price trends.

  • Gargi Chaudhuri, BlackRock's chief investment and portfolio strategist for the Americas

Egg prices had skyrocketed by 59% in the last year. This spike is the biggest jump of any single category for the month of February. The climbing prices and soaring profits have recently led the U.S. Justice Department to launch an investigation into potential antitrust violations.

Economists called the avian flu outbreak the major reason for the skyrocketing egg prices. The virus killed off millions of egg-laying chickens, contributing to a drastic decrease in the supply of eggs. Other factors, like the impacts from increased input costs, could be playing a role in the higher prices as well.

No surprise there, as instant coffee prices have been skyrocketing, up about 9% over the last year. Climate change has intensified droughts that wipe out crops as far away as Brazil, one of the world’s largest coffee producers. Consequently, coffee bean supplies have crashed.

Despite significant price increases for some grocery staples, overall grocery inflation is very low. Over the last year, it is only 1.9%. That would indicate that overall supply chain problems continue to improve, and food price inflation has started to level off.

Progress is bumpy.

  • Michael Pugliese, senior economist at Wells Fargo Economics

Looking forward, possible future trade policies may have an influence on inflation. These latest tariffs announced by Trump are on top of similar measures already taken against Canada, China, and Mexico. These three countries are the U.S.’s top trading partners. These tariffs, a tax paid by U.S. importers, add costs for businesses that ultimately get passed to consumers, economists said.