Trump's Tariffs Shake U.S. Inflation and Economic Forecasts

U.S. consumer prices fell in March due to cheaper gasoline and used vehicles, driven by President Trump's increased tariffs on Chinese imports. This decline might not be sustainable, as future inflation and recession concerns loom. The Federal Reserve could cut interest rates as markets react to these economic shifts.

In March, U.S. consumer prices saw an unexpected dip, driven mainly by reduced costs of gasoline and used vehicles. However, the lasting impact of this inflation decline is uncertain, as President Donald Trump intensifies tariffs on Chinese imports, sparking fears of a recession.

The first decrease in monthly prices in nearly five years indicates potential softening demand, particularly as markets adjust to the U.S.-China trade tensions. The Federal Reserve is anticipated by financial markets to respond with significant interest rate cuts this year to address economic concerns.

Price reductions in fuel sectors helped counterbalance increases in natural gas and electricity costs. However, solid rises in food prices, especially for eggs, meat, and dairy, contrast with decreases in fruits, vegetables, cereals, and bakery products. Core inflation, excluding volatile sectors, remained moderate.

(With inputs from agencies.)