Consumer prices fall in March

Myles Udland

Headline inflation fell in March, but "core" prices rose more than expected. 

The latest consumer price index report from the BLS showed that in March, prices fell 0.1% over the prior year, but on a "core" basis, which excludes the more volatile cost of food and gas, prices rose 1.8%. 

Prices were expected to be flat over last year and rise 1.7% on a core basis. 

Compared to last month, prices rose 0.2%, below expectations for a 0.3% increase, and on a "core" basis prices rose 0.2%, in-line with expectations. 

A big mover in the report was the price of food, which fell 0.2% over the prior month, as the food at home sub-index fell 0.5%, the largest decline for this measure since April 2009. Energy prices rose 1.1% as gas prices rebounded. 

In a note to clients following the report, Ian Shepherdson at Pantheon Macro said, "In one line: Nothing alarming, but core inflation is not falling, and rents have real upside." 

Shepherdson added, "The 0.3% increase in [owners' equivalent rents] — the biggest since Dec 13, in the component which alone accounts for 31% of the core — is potentially a big deal ... The rental vacancy rate is at a 20-year low and falling; rents could easily move substantially to the upside, especially if wage gains pick up."

Here's Shepherdson's chart showing the uptick in OER.

NOW WATCH: Here's what it takes to be President Obama's right-hand man

See Also: