It seems as though the inflationary effects of our current government policy has yet to take hold, as prices for consumer products and services have declined despite an improving economy and massive amounts of money to go around. In March, the Consumer Price Index was down 0.1% for the month, following gains in the first two months of the year. Prior to that, the CPI declined in each of the three previous months, including a record 1.7% decline in November.
Core CPI, which excludes energy and food prices because of their volatile nature, continued its trek upwards, though, as it rose 0.2% for the month, slightly higher than economists expectations. In the last year, consumer prices have decreased by 0.4%, the first year-over-year decline in the CPI since August 1955. Core CPI has risen 1.8% in the same period, in a sign the defation fears are overblown.
The reading was largely attributed to a decrease in consumer energy prices. Energy prices in the US decreased 3.0% in March, after rising 3.3% in Febraury. All the energy indexes decreased, particularly the indexes for fuel oil, natural gas, and motor fuel.
The index for all items less food and energy increased 0.2 percent for the third month in a row. An 11.0 percent increase in the index for tobacco and smoking products accounted for over sixty percent of the March rise, with a 0.6 percent increase in the new vehicles index also contributing. In contrast, the indexes for lodging away from home, used cars and trucks, and airline fares continued to decline.
In February, the overall CPI rose 0.4%, while the core gained 0.2%.
Shelter prices in March were unchanged. Rent and owners’ equivalent rent each increased 0.2%.
Medical care prices rose 0.2%, including a 0.6% gain in hospital and related services prices.
Apparel prices fell 0.2%. Transportation prices decreased 1.1%.
The food index declined 0.1 percent for the second straight month to virtually the same level as October 2008.
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