Energy costs bump US consumer inflation higher in March
A jump in US fuel and electricity costs drove consumer prices higher in March but underlying trends still pointed to tame inflation pressures, according to government data released today.
The fresh sign that inflation remains subdued – despite steady job creation and falling unemployment – will likely comfort Federal Reserve policymakers.
They have made clear they will be patient before considering raising interest rates again.
The US consumer price index, a broad measure of changes in costs for household goods and services, rose 0.4% compared to February, according to the Labor Department’s monthly report.
It was the biggest increase in more than a year and came in a notch higher than economists had been expecting after energy prices jumped 3.5% in the month, as did costs for food.
But excluding these volatile categories, the “core” CPI measure was held down by falling prices for clothing, used autos and airfares, rising just 0.1 percent, the same as the increase for February.
Compared to March of last year, the index rose to 1.9%, the highest level in four months, also due to a sudden jolt from food prices which jumped 2.1%, the biggest increase in three years.
But core CPI for the latest 12 months, fell to 2%, down from 2.1% in February, for the smallest gain in 13 months and the second decline in a row.
US inflation has defied expectations for several years, remaining low despite falling unemployment and rising wages which were expected to drive up prices.
However, economists say the picture could finally change in mid-2019 as the current US labour shortage rises and wage gains continue, potentially leaving the Federal Reserve with little choice but to resume raising interest rates.
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