Latest inflation report shows some stabilization, economist warns about credit & job market

The latest U.S. inflation report shows inflation slowed significantly in March.

Prices are moving in a better direction for consumers; the Consumer Price Index shows inflation fell to its lowest level since May 2021, and for the first time since September 2020, grocery prices fell from month-to-month. Consumers are still feeling the pinch though compared to the same time last year prices are up overall five percent.

Dr. Eugene Flood, Director of the Janus Henderson Group said overall inflation is slowing but gradually. Flood said there are three areas where consumers are feeling the numbers directly.

"The first area is energy prices," Flood explained. "Energy prices are down and they've been down for the last six months. And, we saw that continuation in March. So, there's definitely a relief that consumers can feel there and food prices have been ahead of brutal rise over the last year, but they're showing the first signs of stabilization last month. So, hopefully going forward we'll see food prices a little flat, or even down. The third area is rent. Now, rents are still rising, but the forward-looking data suggests that they're going to start to stabilize in the next few months."

Flood believes inflation will continue to cool.

"But there are three areas that I think consumers need to keep an eye on. The first is interest rates. Looking forward to the rest of the year. I think interest rates will continue to rise because they're at a very low level right now. The second area is credit. Credit conditions will get tighter in my estimate. So, it's going to get harder to get loans and you may need a larger down payment or a higher fico score to qualify. The third area is the job market. The job market is going to slow and further in my estimation, job openings, in particular, are going to start to fall markedly so it's going to be harder to find a job."