US Inflation Highest in Year Even as Consumer Prices Drop in March

U.S. consumer prices declined for the first time in 10 months in March while inflation over the past 12 months rose the most in a year, according to government figures released Wednesday, April 11, 2018.

Higher costs in areas like healthcare, shelter and food were offset by falling gasoline prices, the data for March showed. 

Consumer prices in March retreated 0.1% after they climbed by 0.2% in February, the Labor Department said in its monthly report on the Consumer Price Index. The CPI measures what Americans pay for everything from vegetables to vehicles.

In two key areas:

  • Prices at the pump tumbled 4.9% last month after falling 0.9% in February. Still, they jumped 11.1% from March 2017. The broader index for energy, which combines items like gasoline, electricity and fuel oil, fell 2.8% last month after edging up 0.1% previously. The Labor Department’s report showed its year-over-year increase at 7%.

  • Food prices climbed 0.1% in March after reading flat in February. They registered a 1.3% increase over the past 12 months.

Stripping the more volatile food and energy components, so-called core consumer prices rose 0.2% for a second month in a row.

"Along with shelter and medical care, the indexes for personal care, motor vehicle insurance, and airline fares all rose," the report said. "The indexes for apparel, for communication, and for used cars and trucks all declined over the month," it added.

Shelter or housing costs grew 0.4% after two consecutive monthly increases of 0.2%. The index rose 3.3% year-on-year. Components of shelter include pricing items like rent for apartments, rental equivalence, lodging away from home such as hotels, and housing at schools. The index accounts for about one-third of the entire CPI.

U.S. inflation advanced 2.4% in the 12 months ending March compared to 2.2% previously. The headline year-over-year figure is the quickest since March 2017 and, the report notes, higher than the 1.6% average annual rate over the past 10 years.

Core inflation grew 2.1% over the past year — the biggest 12-month increase since the period ended February 2017 — following three straight increases of 1.8%. The 12-month reading had been stuck at either 1.7% or 1.8% for ten consecutive months. The core annual measure is one of the benchmark inflation rates monitored by the Federal Open Market Committee (FOMC) as it helps the central bank decide where to set its key interest rate.

"U.S. inflation is warming up rather than heating up," Reuters quoted Sal Guatieri, a senior economist at BMO Capital Markets in Toronto. "Still, the upward trend could suffice to nudge the Fed three more times this year."

The following table of key inflation figures is for the last seven months through March, as published by the U.S. Labor Department’s Bureau of Labor Statistics (www.bls.gov/cpi). To index the data each month, the BLS monitors the prices of about 80,000 consumer goods and services from around the nation. All monthly and annual pricing changes are in percentages.

September to April 2018 Consumer Prices – Gains & Losses in Percent

  Sept 2017 Oct 2017 Nov 2017 Dec 2017 Jan 2018 Mar 2018 Apr 2018 12 Month
All items 0.5 0.1 0.3 0.2 0.5 0.2 -0.1 2.4
  Food 0.1 0.1 .0 0.2 0.2 .0 0.1 1.3
    Food at home .0 0.1 -0.1 0.2 0.1 -0.2 0.1 0.4
    Food away from home 0.3 0.1 0.2 0.2 0.4 0.2 0.1 2.5
  Energy 4.7 -1.4 3.2 -0.2 3.0 0.1 -2.8 7.0
    Energy commodities 9.6 -3.0 5.8 -0.7 5.8 -0.9 -4.7 11.3
      Gasoline (all types) 10.0 -3.2 6.0 -0.8 5.7 -0.9 -4.9 11.1
      Fuel oil 6.4 1.4 5.6 0.9 9.5 -3.6 -0.7 20.0
    Energy services 0. 0.4 0.5 0.4 -0.8 1.4 -0.2 2.5
      Electricity 0.1 0.4 0.5 0.2 -0.2 0.4 .0 2.2
      Utility (piped) gas service -0.4 0.4 0.7 1.0 -2.6 4.7 -1.2 3.4
  All items less food, energy 0.1 0.2 0.1 0.2 0.3 0.2 0.2 2.1
    Commodities less food, energy -0.2 .0 -0.1 0.2 0.4 0.1 -0.1 -0.3
      New vehicles -0.3 -0.2 0.2 0.5 -0.1 -0.5 .0 -1.2
      Used cars and trucks -0.3 0.7 0.5 0.7 0.4 -0.3 -0.3 0.4
      Apparel 0.1 -0.2 -0.9 -0.3 1.7 1.5 -0.6 0.3
      Medical care -0.5 .0 0.5 0.9 -0.1 -0.3 0.1 1.4
    Services less energy 0.2 0.3 0.2 0.3 0.3 0.2 0.3 2.9
      Shelter 0.2 0.3 0.2 0.3 0.2 0.2 0.4 3.3
      Transportation 0.3 0.4 0.1 0.3 0.8 1.0 0.2 4.3
      Medical care 0.1 0.3 -0.1 0.2 0.6 .0 0.5 2.1

 

The BLS releases inflation data around the middle of every month based on consumer prices surveyed in the previous month. The Consumer Price Index (CPI) for April and the latest annual period become public on May 10, 2018.

CPI data is used in calculating inflation rates and in this site’s calculator for inflation. The US Inflation Calculator shows cumulative inflation and the change in buying power of the U.S. dollar over time.

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