The Bureau of Labor Statistics reports that the consumer price index, or CPI, fell to a seasonally adjusted rate of 0.2% in March. In February the CPI-U increased 0.7%. A large part of the decline has to do with gasoline prices falling 4.4%. The energy index, which rose 5.4% in February, decreased 2.6% in March. In addition, the food index remained stable.
Economists believe that the CPI-U, which represents the price urban consumers pay for a basket of goods and service, provides a more accurate measurement of the general public. 90 percent of the total U.S. population resides in urban centers.
Other CPI Metrics for March
Decreases in CPI-U indexes, which include apparel, household furnishings and tobacco were offset by increases in the following indexes:
- Shelter – 0.2%
- Used cars and trucks – 1.2%
- New Automobiles and parts – 0.1%
- Medical care – 0.3%
Clothing prices declined 1% in March—the biggest decrease in 12 years, which was led by prices falling for men’s underwear and socks. The cost of apparel for babies and toddlers drop the most since early 1999.
In February, the all items index increased 2.0% for the 12 month period, before applying seasonal adjustments. In March, the index went up 1.5%. This represents the smallest increase since the 12 month period ending in July, according to the BLS report.
The all items index—less food and energy prices—rose 0.1% compared to 0.2% in February. This measurement is called the “core index.” The Bloomberg survey of 82 economists estimated a median 0.2% gain for the core index. Their predictions ranged from a 0.3% decline to a 0.2% gain.
Subtracting the food and energy indexes from the all items index, the remaining indexes of goods and services increased 1.9% over the last 12 months. During the same period, the energy index declined 1.6 percent and the food index rose1.5%.
Economy Continues to Underperform
The tepid inflation reading provides another piece of evidence that the U.S. economy continues to move along at a pace that will make it challenging. On the heel of news of the Chinese economy growing slower than expected, which sent commodity prices, including oil and copper, tumbling, experts expect inflation to remain in check over the coming months.
The drop “marks the start of what will likely turn out to be a string of declines stretching into the summer,” said Paul Ashworth an economist at Capital Economics. Usually, crude oil and wholesale gas prices go up in the spring in anticipation of the summer driving season. According to Ashworth, prices “continue to fall in April.”