The inflation rate for consumer goods and services fell slightly in March, surprising experts who had worried that the economy would begin to show early signs of the initial tariffs on some imported goods.  

The consumer price index fell 0.1% on a seasonally adjusted basis in March, after rising 0.2% in February, the U.S. Bureau of Labor Statistics reported today. The inflation rate for all items was a surprisingly low 2.4% during the past 12 months. Core inflation, which excludes the volatile food and energy costs, was running at a 2.8% annual rate. Wall Street had expected overall inflation to reach 2.6% and core inflation to hit 3%.

The lower rates were led by energy costs, which fell 2.4% in March, after rising 0.2% in February. Gasoline prices retreated by 6.3% and fuel oil fell 4.2% in March. Electricity costs were up 0.9% and natural gas prices jumped 3.6% in March. For the past 12 months, gasoline prices were down 9.8%.

Housing prices rose just 0.2%, down from February’s gain of 0.3%. For the past 12 months, overall housing prices were up 4%, the smallest gain since 2021, according to CNBC.

Food costs increased 0.4% for the month, which was an increase from February’s rise of 0.2%. Food costs have risen 2.4% during the past 12 months. Food at home rose 0.5% more in March, while food in restaurants was up 0.4%.

The cost of eggs once again was a major culprit for the increased food costs, with March prices rising 5.9%. The index for meats, poultry and eggs rose 1.3%. The index for other foods was up 0.5%. Dairy and related products rose 1%.

The index for all items, less food and energy, rose a scant 0.1% in March, following a 0.2% rise in February. Medical care, personal care, education, new vehicles and apparel all went up in price in March, whereas the cost of airline tickets, car insurance, used cars and trucks fell.

The unexpected low inflation rate left some economists wondering if the March reading was the calm before the economic uncertainty brought on by President Donald Trump’s ever-changing trade policies.

First American Senior Economist Sam Williamson said while the lower inflation rate is encouraging for the Federal Reserve’s inflation fight, rate cuts remain unlikely as policymakers wait to see the effects of recent tariff changes reflected in future data.

“Amid the tariff uncertainty, today’s consumer price index report provided some positive signs for inflation, as the headline inflation decreased month-over-month for the first time in nearly three years. In fact, both the headline and core inflation indices posted the slowest annual growth rates since inflation began surging in early 2021.”