Surprising slowdown in US inflation
Print Edition
US consumer prices rose less than expected in March and underlying inflation slowed, suggesting the Federal Reserve will remain cautious about raising interest rates this year.
Other data yesterday showed the number of Americans filing for jobless benefits fell last week, revisiting a level last seen in 1973, showing sustained strength in the labor market.
The Labor Department said 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 added 0.9 percent after advancing 1 percent in February. Economists 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 gain 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 easing in the core CPI readings comes after Fed Chair Janet Yellen doubted about the sustainability of broad gains in prices. Yellen said she believed that “transitory” factors were behind the recent run-up in prices.
In a second report, the department said initial claims for state jobless benefits fell 13,000 to a seasonally adjusted 253,000 for the week ended on Saturday. That matched the level for early March, which was the lowest since November 1973.
Jobless claims have now been below 300,000, a threshold associated with healthy labor market conditions, for 58 weeks, the longest stretch since 1973.
Despite labor market strength, the Fed will probably not hike rates again before September.
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