Policymakers and economists say the latest data is only a temporary reprieve as tariffs risk stoking higher inflation.
Inflation likely cooled in March, a welcome development given the uncertainties surrounding President Trump’s sweeping global tariffs.
The Consumer Price Index is set to have climbed 2.5 percent last month from a year earlier, a slower pace than February’s 2.8 percent increase and the slowest annual rise since September. Over the course of the month, prices are expected to have risen just 0.1 percent.
A gauge tracking underlying “core” inflation, which strips out volatile food and energy items, is forecast to have steadied at an annual pace of 3 percent in March, following a 0.3 percent monthly increase.
The report, which will be released at 8:30 a.m. Eastern on Thursday, covers a period before the bulk of Mr. Trump’s tariffs were put in place. In recent days, the president’s plans have changed dramatically, culminating in the administration on Wednesday announcing a 90-day pause on punishing levies that had been put in place on April 2.
Mr. Trump’s decision to pause came as global financial markets wobbled and started to flash warning signs about investors’ appetite for U.S. assets. Goods coming into the country from most countries will now face a 10 percent tariff, while Chinese imports will face a 125 percent charge, following Beijing’s decision to retaliate against U.S. products.
Mr. Trump’s pivot significantly eased worries about the extent of the economic damage stemming from his administration’s trade policies. But economists warn that the tariffs in place will still prove costly, leading not only to slower growth but higher inflation.