Consumer prices rose modestly in March amid signs that a spike in gasoline costs was ebbing, but inflation still outpaced workers’ earnings, the Labor Department said Friday.
The New York Times
Consumer prices increased 0.3 percent last month, the department said. Gasoline prices rose 1.7 percent, a slowing from February when costs at the pump rose more than three times as quickly.
Still, workers’ earnings fell 0.4 percent in March after adjusting for the increase in prices.
Other data showed that consumer sentiment slipped in April as higher gasoline prices hit household budgets.
“The underlying problem of inflation outstripping wage gains remains. That is the danger for the economy in the long run,” said Joseph Trevisani, a market strategist at Worldwide Markets in Woodcliff Lake, N.J.
Core inflation, which strips out food and energy prices, climbed 0.2 percent, pushed higher by rising rents, medical care costs and used car prices.
In the 12 months to March, core consumer prices increased 2.3 percent after rising 2.2 percent in February. The persistence of core inflation could affect the Federal Reserve’s maneuvering room for stimulus. “This could hem the Fed in,” said Boris Schlossberg, head of research at GFT Forex in Jersey City, N.J.
Overall consumer prices rose 2.7 percent compared with a year ago, down from a reading of 2.9 percent in February.
Still, consumers appear anxious they are falling behind. The Thomson Reuters/University of Michigan’s preliminary reading for the consumer sentiment index dipped slightly to 75.7 in April. Analysts had expected the reading to hold steady.
At the same time, consumer expectations for inflation over the coming year declined, reflecting the slower rise in gasoline prices.
And in March, a drop in electricity costs eased some of the bite from higher gasoline prices. Electricity costs fell 0.8 percent, the steepest decline since June.
Food prices climbed 0.2 percent last month, with poultry prices up by the most since January 2008.