Inflation gauge shows decline in March
- Author: Eleanor Harrison Apr 12, 2018,
Apr 12, 2018, 6:20
Core inflation, which excludes energy and unprocessed food products, climbed to 0.8 percent from 0.6 percent.
The report suggests inflation, after being dormant much of a year ago, is again rising slowly but steadily toward the Federal Reserve's goal.
Over the last 12 months, inflation is running at a rate of 2.4 percent.
But more significant was the 12-month measure for CPI which jumped two tenths to 2.4 per cent, the second straight increase and the highest rate since March of a year ago.
The Federal Reserve last month increased its benchmark interest rate by a quarter-point and signaled that it expected to raise rates a total of three times this year, the same number of rate hikes it delivered in 2017.
According to the agency, in annual terms (March 2018 to March 2017) the growth of consumer prices slowed down to 13.2% from 14% in February 2018 and 14.1% in January 2017. Including all items, the CPI was down 0.1 percent from February on a drop in gasoline costs, with the index up 2.4 percent from a year earlier, also the most in a year.
If inflation climbs any faster, the central bank is likely to raise US interest rates more aggressively. Fed Chairman Jerome Powell said last week that 12-month inflation readings "should move up notably this spring" because of the fading of weakness from a year earlier. The core CPI is now well above the 1.8 per cent annual average increase over the past 10 years. That measure-the price index for personal consumption expenditures-shows inflation continues to run below the Fed's target but is not far off.
The core CPI was lifted by rising rents and healthcare costs.
Mobile-phone service prices increased 0.2 percent in March after falling 0.5 percent the prior month. That was the biggest annual increase since February 2017.
"Despite the downward surprise for CPI, mostly due to a correction of food prices after the holiday, the overall economy remains robust", said Zhang Yi, a Beijing-based analyst with Capital Securities.
Prices for new motor vehicles and recreation were unchanged last month. Their inflation-adjusted hourly earnings rose 0.4% while the length of the number of hours per week they worked was unchanged. Prices consumers paid for clothing went down 0.6 percent.