Inflation Cools in Australia, U.S., and Japan

Recent data show that both Australia's core inflation rate and U.S. inflation measures have cooled, with Australia's Reserve Bank measure dropping within its 2-3% target band for the first time in over three years and U.S. inflation rising 2.3% year-over-year in March. Despite the softer U.S. inflation, consumer spending surged as buyers rushed to purchase autos ahead of President Trump’s new tariffs, which are expected to push prices higher in the coming months. Analysts warn that the recent slowdown in U.S. inflation may be temporary, with forecasts suggesting a potential rebound in core inflation by the end of the year. Japan's central bank also anticipates that global tariffs and slowing growth will cool inflation and delay achievement of its price targets, prompting a dovish stance. Quarterly data from the U.S. Bureau of Economic Analysis show U.S. inflation accelerated to 3.6% in Q1 2025, even as the economy contracted, reflecting ongoing volatility. These developments highlight that while inflation appears contained for now, upcoming tariffs and economic challenges could quickly reverse the trend.