Trouble For Uncle Sam? US Inflation Rate Jumps To 3.5%, Leaves Markets Jittery

Trouble For Uncle Sam? US Inflation Rate Jumps To 3.5%, Leaves Markets Jittery

In January, the inflation rate of the largest economy in the world was at 3.1 per cent, which although was higher than the 2.9 per cent rate of December 2023, it did not faze market analysts as much.

Juviraj AnchilUpdated: Thursday, April 11, 2024, 12:49 PM IST
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Representative Image | Image by Gerd Altmann from Pixabay

The US inflation rate has eluded expectations again. The inflation rate for the previous month of March stands at 3.5 per cent. This is higher than previous month's (for February) 3.2 per cent, exhibiting in a massive jump of 50 basis points.

In January, the inflation rate of the largest economy in the world was at 3.1 per cent, which although was higher than the 2.9 per cent rate of December 2023, it did not faze market analysts as much.

But the progress ever since then has definitely raised some eyebrows. This as it widely expected, that the inflation rate would dip, paving the way for a subsequent decrease in interest rates from the US Federal Reserve.

As of result of this, markets are now less and less hopeful of a rate cut. Interestingly, in the last Fed meeting in , the authority retained the interest rate at 5.25 per cent-5.50 per cent, while indicating towards a cut in the near future. The next US Fed meeting is between June 11-12.

Markets Slump At Inflation Numbers

Markets have responded in accordance to the ostensibly adverse situation. When markets closed for trading on Wednesday in the red territory. The Dow Jones Industrial Average ended on 38,461.51, losing as much as 422.16 points or 1.09 per cent.

S&P 500 also lost 0.95 per cent, taking its fortunes to 5,160.64 points. The tech-heavy Nasdaq also dropped by 0.84 per cent to end the day's trade on 16,170.36.

This recent rise in inflation is being attributed to a rise in fuel and housing prices in the United States. This also comes at a time, when overall numbers, with regards to employment rate has looked favorable for the Biden administration. In this crucial election year, these developments will have a ripple effect on the electoral prospects, particularly for the incumbent, Joe Biden.

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