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March Inflation Down Significantly, But Will it Last?

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Annual Inflation Rate 2010- Mar 2025

The U.S. Bureau of Labor Statistics released its March 2025 Inflation report on April 10th, 2025. The report showed that Annual Inflation was down from 2.8% in February to 2.4% in March.

Calculated to two digits, it was  2.82% in February and 2.39% in March. Although this month’s numbers look very good there is a surprise hidden in the monthly numbers. (See this month’s MIP).

Inflation Prediction:

This is the second month in a row that actual inflation came in slightly below our “extreme low” projection. We had projected an “extreme low” of 2.42% for March, but it came in at 2.39%. Of course, had we been rounding to one digit as the BLS does, it would have been right on the nose of 2.4%.

MIP Mar 2025- Reality Apr 25

This Month’s MIP

 

The current MIP projection shows that inflation could rise through August.

MIP Apr 2025

This is because those months were much lower than average in 2024. So, as the monthly numbers fall out of the calculation if average numbers replace them, the total annual inflation will rise. The monthly numbers were:

May-24 Jun-24 Jul-24 Aug-24
0.17% 0.03% 0.12% 0.16%

March 2025 was very low at 0.22%, but even if we have another four months like that, annual inflation will still rise.

See this month’s MIP prediction 

Annual Inflation… 2.39% in March 2025

  • Annual Inflation fell from 2.82% to 2.39%
  • CPI Index rose from 319.082 to 319.799
  • Monthly Inflation for March was 0.22% down from 0.65% a year ago.
  • Next release May 13th 2025
Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec
2025  3.00% 2.82% 2.39% NA NA NA NA NA NA NA NA NA
2024  3.09% 3.15%  3.48% 3.36% 3.27% 2.97% 2.89% 2.53% 2.44% 2.60% 2.75% 2.89%
2023  6.41%  6.04%  4.98%  4.93%  4.05%  2.97%  3.18% 3.67% 3.70% 3.24% 3.14% 3.35%

BLS Commentary:

The BLS Commissioner reported:
“The Consumer Price Index for All Urban Consumers (CPI-U) decreased 0.1 percent on a seasonally adjusted basis in March, after rising 0.2 percent in February, the U.S. Bureau of Labor Statistics reported today.
Over the last 12 months, the all items index increased 2.4 percent before seasonal adjustment. The index for energy fell 2.4 percent in March, as a 6.3-percent decline in the index for gasoline more than offset increases in the indexes for electricity and natural gas. The food index, in contrast, rose 0.4 percent in March as the food at home index increased 0.5 percent and the food away from home index rose 0.4 percent over the month.”

Looking at table A below we can see that on an annual basis energy is down as well as on a monthly basis.

The biggest gainers on an annual basis were Services like Food away from home, Energy Services, shelter, and transportation services. On a monthly basis, in addition to Energy, Used Vehicles, Medical Care Commodities, and Transportation Services were down.

Table A CPI- for Mar 2025Although these “Seasonally Adjusted” numbers are slightly different than those typically presented by the BLS, the following chart from the Federal Reserve shows the gap between inflation with and without Food and Energy. Comparing the two, highlights how much food and energy are contributing toward overall inflation.

Without food and energy, inflation would be 2.809%. But due to the downward pressure of Energy total inflation according to the FED is 2.406%.

FRED CPI Inflation Chart 1965 -Mar 2025

Source: St. Louis FED

FED Monetary Policy

March 2025 Summary:

  • FED Assets are Falling
  • M2 Money supply is rising
  • FED Funds Rates Remain at 4.33%

FED Assets and M2 Money Supply

As of April 2, 2025 FED assets are down to 6,723,452 million (6.72 Trillion) or basically, back to May 2020 levels. A month ago, on March 5th, FED assets were down to 6,756,764 million (6.75 Trillion). So, the FED is continuing to reduce assets.

QE5 was totally unnecessary and the FED has now sopped up the excess liquidity it created in the unnecessary QE 5. Although the market is down over the last quarter, the FED has been able to reduce Assets without rapidly crashing the market but Trump’s tariffs have spooked the markets recently.

FED Assets 2004-March 2025

Looking at the M2 money supply we get a slightly different picture. Here we see a steady growth of the money supply from 2009 through 2020 (#1), then a sharp spike as we saw with FED assets (#2), and then a slightly less sharp incline (#3) (but longer duration for QE 5) taking M2 to 22 Trillion dollars in 2022. From 2022 to 2023 (#4) we see the decline we would expect due to the reduction of FED assets…

BUT… rather than continuing to decline in 2023 and 2024 as FED assets do, M2 returns to the same slope of increase as from 2012-2020 (#5), despite FED assets declining. This could be the reason for the rebound in the stock market, beginning at about the same time as this uptick in M2.

M2 March 2025

Global M2

The Global M2 Money Supply is the composite of all the major countries’ money supplies. We can see that on a global scale the money supply has been increasing throughout 2025. Generally, an increase in the money supply will result in a rising stock market with a 2 to 4-month delay.

Global M2 Money Supply April 10 2025

FED Funds Rate

The chart below shows the rapid increase in interest rates from February 2022, when they were just 0.08% to a year later, when they were at 4.57%. From August 2023 through August 2024, the FED maintained a stable Funds Rate at 5.33%. Then, in September, the FED announced a 1/2% reduction in the range. October numbers show the rate at 4.83%. At its November meeting the Fed lowered the federal funds target range by 25 basis points to 4.5%-4.75%, with the actual rate coming in at 4.48% in December. On December 19, 2024 they lowered the target range to 4.25 – 4.50%, since then, the FED held its Funds rate steady from January through March 2025 at 4.33%.

Fed Funds Rate 2015-Mar 2025

More info about FED Monetary Policy and Inflation

Inflation Chart

Annual Inflation Rate 2010- Mar 2025

Monthly Inflation Compared to Previous Years:

The monthly inflation rate for March 2025 was 0.22% half as much as February’s 0.44%.

A year earlier, in March 2024, monthly inflation was 0.65%.

Monthly Inflation for Mar 2025

Not Seasonally Adjusted Monthly Inflation Rates

Note: January 2022’s 0.84% was the highest January since 1990. June was the highest June since 1941 (although the first quarter of 1980 had some higher rates). Typically, the first quarter has the highest monthly inflation and the 4th quarter is the lowest (even negative).

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2016 0.17% 0.08% 0.43% 0.47% 0.41% 0.33% (0.16%) 0.09% 0.24% 0.12% (0.16%) 0.03%
2017 0.58% 0.31% 0.08% 0.30% 0.09% 0.09% (0.07%) 0.30% 0.53% (0.06%) 0.002% (0.06%)
2018 0.54% 0.45% 0.23% 0.40% 0.42% 0.16% 0.01% 0.06% 0.12% 0.18% (0.33%) (0.32%)
2019 0.19% 0.42% 0.56% 0.53% 0.21% 0.02% 0.17% (0.01%) 0.08% 0.23% (0.05%) (0.09%)
2020 0.39% 0.27% (0.22%) (0.67%) 0.002% 0.55% 0.51% 0.32% 0.14% 0.04% (0.06%) 0.09%
2021 0.43% 0.55% 0.71% 0.82% 0.80% 0.93% 0.48% 0.21% 0.27% 0.83% 0.49% 0.31%
2022 0.84% 0.91% 1.34% 0.56% 1.10% 1.37% (0.01%) (0.04%) 0.22% 0.41% (0.10%) (0.34%)
2023 0.80% 0.56% 0.33% 0.51% 0.25% 0.32% 0.19% 0.44% 0.25% (0.04%) (0.20%) (0.10%)
2024 0.54% 0.62% 0.65% 0.39% 0.17% 0.03% 0.12% 0.08% 0.16% 0.12% (0.05%) 0.04%
2025 0.65% 0.44% 0.22%

See: Monthly Inflation Rate for more information and a complete table of Unadjusted Monthly Rates.

Misery Index

Current Misery Index:

Unemployment 4.20% + Inflation 2.39% = 6.59%

This month inflation is down but unemployment is up, and the misery index is down slightly to 6.59%. For the first half of 2024, the Misery index hovered around 7% before falling to the high 6s. It finished the year at 6.99% and moved up very slightly to 7.00% in January 2025.

Misery Index- Mar 2025[Read More on the Misery Index…]

Rate of Change (ROC) Charts

The NYSE ROC issued a Sell Signal in November.

NYSE ROC for March 25

The NASDAQ ROC issued a Sell signal in December.

NASDAQ ROC Mar-25

Bitcoin generated a Sell signal in February.

Bitcoin- Roc thru Mar-2025

On March 4th the Fear and Greed Index was in extreme Fear territory. According to Warren Buffet, we should buy when others are fearful.

Fear & Greed March 4 2025By April 1 it had moved to less fearful.

Fear & Greed April 1 2025But then with the Trump tariff announcement the index moved back to “15” extreme fear. Which may have provided another good buying opportunity.

Ethereum also issued a Sell signal in February.

ETH- Roc thru Mar-2025

For more information, see NYSE Rate of Change (ROC)NASDAQ ROC Chart, and Crypto ROC .

 

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