Fueled by gas prices, inflation edges up in March for second straight month
Lucy Perez of Charlotte, N.C., pumps gas at a station in Matthews, N.C., on April 6.
Inflation edged up in March for the second straight month as gas prices continued to rebound after their steep drop.
The consumer price index increased 0.2%, the same as in February, the Labor Department said Friday. February’s increase was the first in four months as a sharp drop in crude oil prices pushed down energy costs across the board.
Last month’s increase was in line with analysts’ forecasts and an indication that inflation is stabilizing.
Gasoline prices increased 3.9% in March, and energy prices more broadly were up 1.1%. That offset a 0.5% decline in grocery prices, the biggest drop since April 2009.
Annual inflation remained extremely low, with prices down 0.1% for the 12 months ended March 30.
During that period, energy prices were down 18.3%, more than offsetting a 2.3% increase in food prices.
But food and energy prices are very volatile. So-called core inflation, which excludes those, was up 1.8% for the year after a 0.2% increase in March.
Federal Reserve officials want to see all prices rising about 2% a year, and concerns over low inflation are weighing on central bank policymakers as they consider when to start raising their benchmark short-term interest rate.
The Fed uses a different inflation barometer based on personal consumption expenditures, but that figure also is low -- up just 0.3% for the year ended Feb. 28, the most recent data available.
Fed officials have indicated they could start raising the interest rate from near zero percent as early as June. But low inflation and other weak economic data recently have led to speculation the Fed could wait longer.
Narayana Kocherlakota, president of the Federal Reserve Bank of Minneapolis, said this week that he expected inflation to remain below the central bank’s annual target for several years.
For that reason, Kocherlakota said, it would be a mistake to start raising the short-term interest rate this year.
But Stuart Hoffman, chief economist at PNC Financial Group, said Friday’s data showed inflation was stabilizing and should give Fed officials confidence to start raising the rate later this year.
Follow @JimPuzzanghera on Twitter
