PERHAPS IT WAS always too good to be true. The big economic story of 2023 was the seemingly painless disinflation in America, with consumer-price pressures receding even as growth remained resilient, which underpinned surging stock prices. Alas, the story thus far in 2024 is not quite so cheerful. Growth has remained robust but, partly as a result, inflation is looking stickier. The Federal Reserve faces a dilemma about whether to start cutting interest rates; investors must grapple with the reality that monetary policy will almost certainly remain tighter for longer than they had anticipated a few months ago.

The latest troublesome data came from higher-than-expected inflation for March, which was released on April 10th. Analysts had thought that the core consumer-price index (CPI), which strips out food and energy costs, would rise by 0.3% month on month. Instead, it rose by 0.4%. Although that may not sound like much of an overshoot, it was the third straight month of CPI readings exceeding forecasts. If continued, the current pace would entrench inflation at over 4% year on year, double the Fed’s target—based on a slightly different inflation gauge—of 2% (see chart 1).