Consumer prices down 0.3 percent in March

Consumer prices down 0.3 percent in March

Consumer prices down 0.3 percent in March

Costs for food away from home have gone up 2.1% during the past year.

US retail sales fell for a second straight month in March and consumer prices dropped for the first time in just over a year, underscoring the magnitude of the loss of economic growth momentum in the first quarter.But with the labor market near full employment, Friday's weak reports failed to change views that the Federal Reserve will raise interest rates again in June.

Still, the Atlanta Fed revised its first-quarter GDP forecast lower from 1.0% to 0.5%.

There were also decreases in sales at building material stores, likely as bad weather halted work at construction sites.

While sales at electronics and appliance stores jumped 2.6% from February, sales at auto and parts dealers paced down 1.2%, and purchases made at clothing stores dropped 1%.

Fed officials have sometimes been divided on the amount of slack in labor markets and the near-term risk of inflation, and the latest CPI figures could support the views of those who favor a slow pace of rate increases as the economy continues to recover.

Electronics and appliance stores saw the strongest increase from February.

That has forced retailers like J.C. Penney Co Inc, Abercrombie & Fitch and Macy's Inc to scale back on brick-and-mortar operations. Compared to previous year, prices rose 2.4%, but still missed their 2.6% target, notching the smallest 12-month increase since November 2015, the latest sign that inflation pressures may be cooling.

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The CPI fell 0.3 percent in March.

As we have previously written, the recent gains in core goods inflation looked unlikely to be sustained given what seemed to be some difficulty with seasonal adjustment at the start of the year.

Prices for all items less food and energy, the "core CPI", decreased 0.1% in March, down from February's 0.2% increase. The Fed has a 2 per cent inflation target and tracks an inflation measure which is now at 1.8 per cent.

The most widely-followed measure of the cost of living in the States took economists by surprise in March, falling back sharply amid an unusually synchronised drop in many categories, albeit mirroring inflation outturns in China and Europe, economists said.

Energy prices fell 3.2 percent from previous month, reflecting a 6.2 percent slump in gasoline.

Rents increased 0.3 per cent in March after a similar gain in February.

The Food Index increased by 18.44 per cent (year-on-year) in March, slightly down 0.09 per cent points from the rate recorded in February, which was 18.53 per cent.

Continued downward pressure on the CPI would likely force the Fed to at least re-evaluate plans for future rate hikes, if not scrap them entirely until prices for many common consumer goods stabilize. And sales at general merchandise stores, or malls, rose 0.3 percent over February on a seasonally-adjusted basis and flat annually.

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