Underlying Inflation Shows Signs of Pickup in US

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Can America Control Inflation

Consumer prices dropped by 1.1 per cent during the month of March taking the annualised rate down to 2.1 per cent from 2.9 per cent in February.

On a monthly comparison basis, consumer prices stayed flat in March, after edging up by 0.2 % in February.

In the 12 month through March, the CPI increased 2.4 percent.

Analysts polled by Reuters had expected March producer inflation would moderate slightly to 3.2 percent.

Yearly rate of consumer inflation climbs to one-year high of 2.4%. Food prices rose 0.1% while the cost of other major household expenses such as rent and medical care rose more sharply, as did prices for plane travel and auto insurance.

March data for China's price rises were released this morning and came in below February's and below forecasts. They've risen just 0.4% in the past 12 months, however. The core consumer price index, which strips out volatile food and energy prices, rose 2.0 per cent in March, slowing from 2.5 per cent in February. The annual core CPI also accelerated as the drag from last year's plunge in prices for cellphone services dropped out of the calculation.

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 numbers aren't yet alarming, but neither can we say with any confidence that (wholesale) inflation has peaked", said Ian Shepherdson, chief economist at Pantheon Macroeconomics. "If we are correct, we would expect the Fed to hike three more times in 2018".

The drop owed entirely to a temporary decline in gasoline prices.

The core CPI's pickup will help reinforce the view of policy makers that inflation had been weighed down by transient factors such as the unusual weakness in the cost of wireless-phone services. Prices of cereals and bakery products rose 0.4 percent.

Economists were looking for an annual increase of 3.2%, down from 3.7% in February.

Healthcare costs increased 0.4 percent, with prices for hospital care shooting up 0.6 percent and the cost of doctor visits rising 0.2 percent. There were also declines in the cost of telecommunication, used cars and trucks, tobacco and education.

That's not to say everything was cheaper last month.

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