U.S. Consumer Prices Rose 0.3% in March

U.S. consumer prices rose in March, driven by higher food and fuel expenses that indicate Americans will spend less on other goods.
TradingEconomics.com, Bloomberg 4/16/2008 6:48:17 AM

The consumer price index climbed 0.3 percent, after no change the prior month, the Labor Department said today in Washington. So-called core prices, which exclude food and energy, increased 0.2 percent, also after no change. Both readings matched median forecasts in a Bloomberg survey of economists.

Inflation, combined with falling home values and mounting job losses, is leading to cutbacks in consumer spending that may push the economy into a deeper recession. Federal Reserve policy makers will likely lower the benchmark interest rate again this month as reviving growth remains their highest priority.

The Commerce Department reported separately that housing starts in the U.S. dropped twice as much as forecast in March to a 17-year low. Work began on 947,000 homes at an annual rate, down 11.9 percent from February and the fewest since March 1991.

Treasury notes were little changed, while the dollar fell to a record low against the euro and weakened versus the yen.

Prices rose 4 percent in the 12 months to March, after a year-over-year gain of 4 percent in February. The core rate increased 2.4 percent from March 2007, after a 2.3 percent year- over-year gain.

Today's report showed energy expenses jumped 1.9 percent, the most since November, after a decrease of 0.5 percent the prior month. Gasoline prices rose 1.3 percent, fuel oil costs jumped 10.1 percent and natural gas prices were up 4.6 percent.

Energy costs continue to climb this month. Crude oil yesterday topped $114 a barrel, the highest since futures began trading on the on the New York Mercantile Exchange in 1983. The average cost of regular gasoline, which rose to $3.40 yesterday, is about 55 cents higher than a year earlier, according to AAA.

The consumer price index is the government's broadest gauge of costs for goods and services. Almost 60 percent of the CPI covers prices that consumers pay for services ranging from medical visits to airline fares and movie tickets.

New vehicle prices dropped 0.1 percent and clothing costs declined 1.3 percent, the biggest decrease since 1998. Airfares rose 3 percent, the most since 2002.

Food prices, which account for about a fifth of the CPI, rose 0.2 percent after a 0.4 percent increase the previous month.

Rents which, make up almost 40 percent of the core CPI, increased in February. Owners equivalent rent rose 0.2 percent, compared with a 0.1 percent gain the month before.



U.S. Consumer Prices Rose 0.3% in March