Core US Inflation Rate Jumps 2.1% in March

Apr 12, 2018, 06:22
Core US Inflation Rate Jumps 2.1% in March

Excluding the volatile food and energy components, the CPI climbed 0.2 per cent, matching February's increase.

The core 12-month measure moved even faster, gaining three tenths of point to 2.1 per cent after holding steady for three months, putting it at its highest level since February 2017.

Gains in raw material prices slowed to 5.1 per cent in March from 5.9 per cent the month before.

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 past year.

They argue that this scenario could compel the Fed to increase interest rates three more times this year.

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. It was the first drop in prices in nearly a year.

Consumer price inflation (CPI) fell 1.1% over the month, far larger than the 0.5% decline expected, leaving the increase on a year earlier at 2.1%.

But with the labour market tightening, the dollar weakening and the stimulus from a $1.5 trillion income tax cut package and increased government spending still to impact on the economy, economists expect inflation will breach its target some time this year.

In line with the central bank's assessments, annual inflation is expected to hover around 2.2% in 2018 and converge to the central bank's target in 2019.

The cost of other major household expenses such as rent and medical care rose more sharply, however, as did prices for plane flights and auto insurance.

Average prices for regular gasoline known as magna increased nationally by 11.4% last month compared to March 2017 while premium gas rose 8.4% and diesel jumped by just over 10%, according to the Energy Regulatory Commission (CRE).

Economists were looking for an annual increase of 3.2%, down from 3.7% in February. Food prices edged up 0.1 percent after being unchanged in February.

The price hikes translate into an increase of 1.76 pesos (just under United States $ 0.10) per liter for motorists buying magna, 1.49 pesos per liter for premium and 1.7 pesos per liter for diesel.

Prices for new motor vehicles and recreation were unchanged last month.