A drop in gas prices pulled down consumer prices in March which came in at Econoday’s low estimate for a 0.1 percent decline. But the core rate, which excludes energy, did hit expectations at a modest 0.2 percent monthly gain with the year-on-year rate rising 3 tenths to 2.1 percent which also hits expectations.
But the gain in the yearly rate shouldn’t raise any eyebrows since it reflects an easy comparison with March last year when wireless service prices started to plunge. The balance of core items in today’s report is showing only limited pressure with downward pull coming from apparel, at minus 0.6 percent, and education & communications, at minus 0.2 percent.
Energy was the weakest factor in the month, down 2.8 percent with gasoline down 4.9 percent. Food is not a factor in the month, rising only 0.1 percent.
But there are some items that are showing a little pressure, at least in March. Medical care rose 0.4 percent following February’s 0.1 percent decline with dental services jumping 1.2 percent. Housing is also showing pressure, though moderate, at a second straight 0.3 percent monthly gain with the closely watched owners’ equivalent rent also up 0.3 percent.
This report is roughly in line with the Federal Reserve’s expectations: modest pressure that is slowly building. Note that the Fed’s 2 percent inflation goal is tied to its PCE index not the CPI which runs a bit hotter. But both move in the same direction which on trend continues to be very slightly higher.