US inflation cools and Americans step up spending as they brace for tariff impact

By CHRISTOPHER RUGABER Associated Press Economics Writer WASHINGTON AP A closely watched inflation gauge cooled last month in a sign that prices were steadily easing before bulk of President Donald Trump s tariffs were implemented At the same time consumers accelerated their spending particularly on cars likely in an effort to get ahead of the duties Wednesday s record from the Commerce Department indicated that consumer prices rose just in March from a year earlier down from in February Excluding the volatile food and force categories core prices rose compared with a year ago below February s Economists track core prices because they typically provide a better read on where inflation is headed The slowdown in inflation could be a temporary respite until the widespread duties imposed by Trump begin to push up prices in a multitude of categories Economists forecast that inflation could reverse its latest decline and reach or higher by the end of this year Wednesday s review also revealed that consumer spending increased from February to March a healthy gain Much of the increase appeared to be driven by efforts to get ahead of duties such as Trump s duty on imported cars which took effect April Spending on autos surged in March the leadership commented But spending on restaurants and hotels also jumped after falling in February a sign Americans are still willing to splurge a little on trip and dining out Car sales spiked last month as consumers and businesses accelerated acquisitions to get ahead of tariffs That means auto sales may fade in the coming months because those assets have already been secured Earlier Wednesday the governing body informed that consumer spending slowed in the first three months of the year compared with last year s final quarter as bad weather depressed shopping and Americans took a breather after healthy spending over the winter holidays The nation s financial system genuinely shrank in the January-March quarter as imports surged as companies sought to get ahead of Trump s tariffs Trump benefited in last year s referendum from broad dissatisfaction among voters about the steep rise in prices that began in and that on average pushed prices up about by the middle of last year Grocery costs shot up nearly As a candidate Trump announced he would straightaway lower prices if elected Yet the president has slapped duties on steel and aluminum as well as cars and a tariff on nearly all other imports And China the United States third-largest trading partner now faces a duty on its exports The inflation-fighters at the Federal Reserve target a inflation rate and pay close attention to Wednesday s inflation gauge known as the personal consumption expenditures price index The better-known consumer price index was distributed earlier this month and also indicated a steady decline Trump has pushed the Fed to cut its key short-term interest rate because inflation has cooled But Fed Chair Jerome Powell has underscored that the central bank is likely to remain on the sidelines as officers gauge how tariffs will impact the economic activity The Fed isn t expected to lower its rate at its approach meeting next week