Food, Apparel, Energy Boost March Index
Consumer prices jumped 0.5% in March, propelled by higher costs for food, energy and apparel, and helped produce the largest quarterly increase in two years, the government reported today.
Last month’s climb in the Labor Department’s consumer price index followed advances of 0.6% in January and 0.4% in February.
Overall, consumer prices in the last three months rose at a compound annual rate of 6.1%.
It was the largest quarterly increase since the first three months of 1987, when prices rose 6.3% on an annual basis, and was significantly higher than the annual consumer price rises of 4.4% registered for each of the last two years.
Price increases have been even steeper at the wholesale level, where inflation ran at a compounded annual rate of 10.2% in the January-March period, the largest quarterly increase in eight years.
Daniel T. Van Dyke, senior economist at Bank of America in San Francisco, said in advance of today’s report that while price rises have moderated some since the start of the year, “we still have a problem” with the pace of inflation.
“Around 5% to 5.5%”
“We’re in a period where the inflation rate seems to be hanging around 5% to 5.5%,” Van Dyke said. “That is too high for any long-run kind of equilibrium and I don’t think that’s what the Federal Reserve has in mind either.”
Food costs last month rose twice as much as they did during the previous month, up 0.8% in March after advancing 0.4% in February.
Energy costs, meanwhile, registered their sharpest increase last month since August, 1987, advancing 1.1% after rising 0.6% in February.
The boost in petroleum-based energy prices, up at a 22.4% annual rate so far this year, accounted for more than two-fifths of the price acceleration during the first quarter, the Labor Department said.
Rising food prices were responsible for nearly one-quarter of the price increases during the quarter, it said.
Excluding those two volatile categories, other consumer prices rose 0.4% in March, the same pace as in February.
