Fed rate hikes could slow after key inflation measure eases in March, PCE data shows

An inflation measure that’s watched closely by the Federal Reserve eased further last month in a development that could keep the central bank on track to pause its aggressive interest rate hikes.

Yet an underlying measure of price increases dipped but remained stubbornly high.

Consumer prices increased 4.2% in March from a year earlier, slower than the 5.1% pace in February and the 40-year high of 7% in June thanks to lower food and energy prices, the Commerce Department said Friday. That’s the smallest annual gain since May 2021.

On a monthly basis, prices ticked up 0.1% following a 0.3% increase the prior month.