In this April 9, 2018, photo, merchandise is displayed at a store in Salem, N.H. On Wednesday, April 11, 2018, the Labor Department reports on U.S. consumer prices for March. (AP Photo/Elise Amendola)
Republished April 11, 2018 - 8:33 AM
Original Publication Date April 11, 2018 - 5:41 AM
WASHINGTON - U.S. consumer prices rose 2.4 per cent in March from a year earlier, the fastest annual pace in 12 months.
The Labor Department said Wednesday that on a monthly basis, the consumer price index declined 0.1 per cent in March. The index's yearly gain, however, suggests that inflation pressures may be picking up.
Excluding the volatile food and energy categories, core prices ticked up 0.2 per cent in March and 2.1 per cent from a year ago. That was the biggest annual increase for core prices since February 2017.
The gains partly reflect the impact of changes in mobile phone services costs, which fell sharply last March after several carriers introduced unlimited data plans. That drop has lifted year-over-year price changes, boosting the annual gains.
Still, economists said there were signs elsewhere of rising prices. Hotel prices jumped 2.3 per cent in March, while rents increased 0.3 per cent. Hospital services costs rose 4.9 per cent.
"U.S. inflation is warming up rather than heating up," Sal Guatieri, an economist at BMO Capital Markets, said.
The Federal Reserve wants inflation to generally run at about 2 per cent, as a hedge against deflation, when prices and wages fall. For most of the past six years, consumer prices have been stuck below that level, according to a separate gauge the Fed monitors.
The consumer price index has averaged just 1.6 per cent in the past decade.
The Fed has lifted the short-term rates it controls six times since December 2015, with the latest increase occurring last month. The Fed's benchmark rate stands at 1.5 per cent to 1.75 per cent, still very low historically.
Fed policymakers have signalled they intend to raise rates twice more this year. If inflation data continues to show signs of picking up, they could hike rates three times.
"The upward trend could suffice to nudge the Fed three more times this year," Guatieri said.
Other items fell in price. The cost of clothing, used cars, and gasoline dropped in March, with prices at the pump down 4.9 per cent, the most since last May.
News from © The Associated Press, 2018