The Labor Department said on Thursday its Consumer Price Index
gained 0.1 percent last month as a rebound in gasoline prices was
partly offset by a drop in the cost of food. There were also
slowdowns in medical care and housing costs.
The CPI fell 0.2 percent in February. In the 12 months through
March, the CPI increased 0.9 percent after advancing 1.0 percent in
February.
Economists polled by Reuters had forecast the CPI gaining 0.2
percent last month and rising 1.1 percent from a year ago.
The so-called core CPI, which strips out food and energy costs,
inched up 0.1 percent. That was smallest increase since August and
followed a 0.3 percent increase in February.
In the 12 months through March, the core CPI rose 2.2 percent after
gaining 2.3 percent in February.
The Fed has a 2 percent inflation target and tracks an inflation
measure which is running below the core CPI. The moderation in the
monthly core CPI reading comes after Fed Chair Janet Yellen recently
expressed doubts about the sustainability of broad gains in prices.
Yellen said she believed that "transitory" factors were behind the
recent run-up in prices. The combination of benign inflation and
weak economic growth in the first quarter suggest the Fed will not
hike rates again before September, even as the labor market
strengthens.
The Fed lifted its benchmark overnight interest rate in December for
the first time in nearly a decade and policymakers recently forecast
only two more rate hikes this year.
Despite the healthy labor market, reports on trade, wholesale
inventories, retail sales and business spending suggest economic
growth almost halted in the first quarter after recording a 1.4
percent annualized rate in the fourth quarter of 2015.
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Growth estimates for the January-March quarter are as low as a 0.2
percent pace.
Gasoline prices rose 2.2 percent in March after plunging 13.0
percent in February. Food prices fell 0.2 percent last month, with
the cost of food consumed at home posting its largest decline since
April 2009.
The core CPI was restrained by housing and medical costs, as well as
apparel. Owners' equivalent rent of primary residence increased 0.2
percent after increasing 0.3 percent in February. Medical care costs
slowed their rapid ascent, gaining 0.1 percent after shooting up 0.5
percent in February.
Apparel prices fell 1.1 percent in March, reversing the prior
month's 1.6 percent advance. Prices for new motor vehicles were
unchanged while the cost of used cars and trucks dipped 0.1 percent.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci)
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