United States: Headline inflation continues to rise, while core inflation remains subdued
April 15, 2011
Consumer prices continued to rise in March, jumping a seasonally adjusted 0.5% over the previous month. The reading matched both the price increase recorded in February and market expectations. However, the figure was well above the flat reading tallied in March 2010 and thus drove annual inflation to 2.7% in March (February: 2.1%), which marks a fifteen-month high. The monthly increase reflected soaring energy costs, as gasoline prices jumped 5.6% over the previous month on the top of an already pronounced 4.7% increase in February. Moreover, the closely watched core inflation index, which does not include food and energy, rose a less severe 0.1% over the previous month, driving annual core inflation to 1.2% (February: 1.1% year-on-year). In fact, core inflation has doubled since it dipped to a record low in October last year. The Fed anticipates PCE inflation (based on the price index for personal consumption expenditures) to average between 2.1% and 2.8% in 2011 and between 1.2% and 2.0% in 2012.