United States: Inflation edges down in March
April 14, 2017
Consumer prices in the U.S., adjusted for seasonal factors, decreased 0.3% from the previous month, a stark contrast to February’s 0.1% increase and the largest decline in more than two years. The reading also surprised to the downside, falling well below market expectations of stagnant growth for the month. The lack of price traction indicates softness in overall demand for consumer goods and services, which could embolden the doves’ rhetoric in upcoming monetary policy meetings. March’s result saw falling fuel prices and mobile phone charges having the largest impact in consumer prices and more than offsetting rising food prices.
Inflation eased from a five-year high of 2.7% in February to 2.4% in March. The decrease, however, did not prevent annual average inflation from inching up to 1.6% in March from February’s 1.5%.
Core consumer prices, which exclude food and energy prices, also declined 0.1% from the previous month in March, a contrast to February’s 0.2% increase and the first drop since January 2010. Core inflation eased to 2.0% in March from February’s 2.2%, the lowest print in a year and a half.
Although the Federal Reserve targets an alternative measure of inflation called the personal consumption expenditures price index (PCEPI), it also follows the core inflation measure closely to judge whether inflationary pressures are increasing in the economy.
Author: David Ampudia, Economist