Expenditure
Monthly % Change Feb. 23–Mar. 23
March 2023 (12 mo. Price Change)
All items
0.1 0.0
5.0 8.5
Food
Energy
-3.5
-6.4
All items less food and energy (Core inflation)
0.4 0.2 0.3 0.4
5.6 1.5 3.3 6.1
Commodities less food and energy
Apparel
New vehicles
Used cars and trucks
-0.9
-11.2
Services less energy services
0.4 0.6
7.1 8.2 1.0
Shelter
Medical care services Transportation services
-0.5
1.4 0.3 1.2 4.0
13.9 13.3 15.0 17.7
Motor vehicle maintenance and repair
Motor vehicle insurance
Airline fares
Food prices increased 8.5% for the 12-month period ended March 2023, though food prices were relatively unchanged in March after increasing 0.5% and 0.4% in January and February, respectively. Energy prices decreased 6.4% over the 12-month period and dropped 3.5% in March, but unexpected announced cuts in oil production by OPEC in early April have caused uncertainty in future energy pricing. New vehicle prices, Shelter, and Transportation Services all had significant increases over the past year at 6.1%, 8.2%, and 13.9%, respectively. New vehicle prices rose 0.4% in March after increasing 0.2% in both January and February. Shelter, which includes housing and rent prices, rose 0.6% in March after increasing 0.7% and 0.8% in January and February, respectively. The index for shelter was by far the largest contributor to the monthly all items price increase. Within Transportation, motor vehicle maintenance and repair, motor vehicle insurance, and airfares all posted double digit price increases over the past 12 months, with airfares posting the highest monthly price increase in March at 4.0%. Interest Rates In 2023, the Federal Reserve continued the upward trek for interest rates by increasing the federal funds rate in the first quarter. Theoretically, the Federal Reserve acts in an independent manner to balance economic growth with inflation. The Federal Reserve tries to accomplish this goal through targeting the “fed funds rate” – a very short-term interest rate that when changed, typically has a rippling effect through the financial markets. In early February and again in late March, the Federal Reserve increased the federal funds rate by 25 basis points. That brought the target rate to 4.75 – 5.00%, the highest it has been since 2006. The 2023 rate increases follow seven rate increases in 2022, including a record four times in which the rate was increased by 75 basis points. The federal funds rate has increased significantly since the beginning of 2022, when the rate was at a record low 0.00 – 0.25%. The chart below shows the federal funds effective (market) rate since January 2000.
Central Wisconsin Report - Spring 2023
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