Feds key inflation gauge cools as Americans rushed to buy cars ahead of Trump tariffs

A closely watched inflation gauge cooled last month in a sign that prices were steadily easing before most of President 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 report from the Commerce Department showed that consumer prices rose just 2.3% in March from a year earlier, down from 2.5% in February.Excluding the volatile food and energy categories, core prices rose 2.6% compared with a year ago, below February’s 2.8%.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 many categories.

Economists forecast that inflation could reverse its recent decline and reach 3% or higher by the end of this year.Wednesday’s report also showed that consumer spending increased 0.7% 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 25% duty on imported cars, which took effect April 3.Spending on autos surged 8.1% in March, the government said.

But spending on restaurants and hotels also jumped after falling in February, a sign Americans are still willing to splurge a little on travel 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 government reported 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 economy actually shrank 0.3% in the January-March quarter as imports surged as companies sought to get ahead of Tru...