Oh My: March's Inflation Comes In at Negative 0.1%

Unbelievable. There is usually no way to actually reverse inflation. Once the dollar is inflated, you can't deflate it. All you can do is cut the rate of inflation to something acceptable, like 1% or lower. Prices will go up less slowly... but they will not actually fall.

Usually. Almost always.

But the last month, prices actually fell 0.1%. This brings the yearly inflation rate down to 2.4%.

Note that the Fed's target for an "acceptable" rate of inflation is around 2%.

So Trump is on the threshold of officially beating inflation. (Though I wouldn't mind a little more deflation...)

U.S. consumer prices fall for first time in almost three years

U.S. consumer prices dipped in March, defying predictions that Trump's proposed tariffs would trigger higher inflation. The decline in the Consumer Price Index marks the first monthly drop in nearly three years--and only the second since inflation spiked under former President Biden.

Key Details:

March's 0.1% decline in overall prices came as a surprise to economists, who had expected a 0.1% increase. Core prices--excluding food and energy--rose by just 0.1%, well below the 0.3% that had been forecast.

Ooooh, economists being surprised by every single thing that happens is TIGHT!

The price of energy dropped 2.4% for the month, led by a sharp 6.3% decline in gasoline. Other falling categories included airfares, used vehicles, motor vehicle insurance, and smartphones.

After nearly three years of steady increases, March's report shows that prices aren't just rising more slowly--they're actually falling, marking a reversal in the inflation trend since Trump took office.

Diving Deeper:

Consumer prices fell in March, delivering a political and economic win for President Donald Trump, who has repeatedly promised to reverse the surge in inflation seen under Biden. The Consumer Price Index dropped 0.1% from February, the first month-over-month decline since mid-2021. The dip defied most economists' expectations and marked a significant shift from the persistent inflation Americans endured under Biden.

"Starting on day one, we will end inflation and make America affordable again," Trump had vowed on the campaign trail. March's report gives weight to that promise, as the numbers suggest prices not only stabilized--but in some cases fell.

No one wants actual sustained deflation (a sustained drop in prices over months as the value of the dollar increases).

If the value of the dollar starts going up, then simply hoarding dollars becomes a viable investment strategy. Just hang on to your dollars -- they're appreciating in value.

This has the bad effect of making investment and risking money in business less desirable. Because what you hope to make from your investment now has to compete with the profit you can make from not spending or investing anything, as your dollars go up in value.

But I doubt very much that we're in a deflationary stage. And a 0.1% increase in the value of the dollar for one month is no big deal. It happens from time to time -- just not in a sustained way.

Still -- what an enormous change from Biden! Trump didn't just cut the rate of inflation in half, he didn't just bring it all the way down to zero... he actually reduced prices by 0.1%.

And how did he do it? Apparently just by stopping the runaway spending under Biden, which all of us have been screaming caused the massive inflation in the first place, as Biden flooded the market with debased dollars he just printed up.

Below: Trump talks tariffs at his cabinet meeting.

posted by Ace at 01:15 PM

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