U.S. CPI Shows Unexpected Strength in March; Core Prices Firm

The Consumer Price Index increased 0.4% during March and repeated the February increase. A 0.3% rise had been expected in the Action Economics Forecast Survey. The 3.5% y/y rise was the highest in six months. It was increased from a 3.1% January low but remained below the peak 9.1% y/y increase in June of 2022. The three-month increase of 4.6% (AR) was more than double the rise at the end of last year. Prices excluding food & energy rose 0.4% for the third consecutive month. A 0.3% increase had been expected. The 3.8% y/y increase held steady last month and remained below the peak 6.6% y/y gain in September 2022. During the last three months, however, core price inflation has accelerated to 4.5% (AR), up from a 2.6% low during August of last year. It was the highest rate since May of last year.

The CPI less food, energy and shelter, another measure of core pricing power, rose 0.3% for the second consecutive month, following four straight months of 0.2% increases. The 2.4% y/y rise remained up from the 2.0% y/y October low, but remained below the 7.6% y/y peak in February 2022.

Energy prices 1.1% (2.1% y/y) after rising 2.3% in February. These gains followed four straight months of decline. Gasoline prices rose 1.7% (1.3% y/y) after a 3.8% rise. Amongst other energy products, fuel oil prices fell 1.3% (-3.7% y/y) after rising 1.1% in February. Electricity prices improved 0.9% (5.0% y/y) after rising 0.3%, while natural gas prices held steady (-3.2% y/y) after two straight months of roughly 2% increase.

Food prices edged 0.1% higher (2.2% y/y) last month after holding steady in February. Egg prices jumped 4.6% (-6.8% y/y), the fifth straight month of strong increase. Meat, poultry & fish prices rose 0.6% (2.1% y/y) after two months of modest decline while cereal & bakery product prices fell 0.9% (0.2% y/y) after rising 0.5% in February. Fruit & vegetable prices improved 0.1% (2.0% y/y) after falling 0.2%, while dairy prices eased 0.1% (-1.9% y/y) after declining 0.6% in February. Nonalcoholic beverage prices rose 0.3% (2.4% y/y) after a 0.2% decline.

Service costs less energy increased 0.5% in March (5.4% y/y) for the second consecutive month. Transportation services costs jumped 1.5% (10.7% y/y), about as they did in February. The cost of shelter rose 0.4% (5.7% y/y) for the fourth month in the last five as owners’ equivalent rent of primary residences increased 0.4% (5.9% y/y) after rising 0.4% in February. Rents of primary residences increased 0.4% (5.7% y/y) after a 0.5% gain. The cost of lodging away from home rose 0.1% (-1.9% y/y) for a second straight month. Education & communication prices rose 0.2% (1.4% y/y) after a 0.5% increase. Recreation service prices ticked 0.1% higher (4.5% y/y) following a 0.5% rise, and medical care service costs rose 0.6% (2.1% y/y) after a 0.1% slip.

In March, the CPI for goods less food & energy declined 0.2% (-0.7% y/y), the fourth decline in five months. Education & communication goods costs fell 1.2% (-6.2% y/y) after a 0.2% rise. Recreation product prices weakened 0.5% (1.9% y/y) after easing 0.2%. Home furnishings prices eased 0.1% (-2.7% y/y) after a 0.3% decline, while appliance costs fell 0.7% (-6.3% y/y) after a 0.9% drop. Apparel prices rose 0.7% (0.4% y/y) after rising 0.6% in February. New vehicle prices eased 0.2% (-0.1% y/y) after slipping 0.1% in February while used car & truck prices declined 1.1% (-2.2% y/y) after rising 0.5% in February.

The Consumer Price figures can be found in Haver's USECON database. The expectations figure is contained in the AS1REPNA database.