Consumer prices south of the border increased by the most in more than a year in March, but underlying inflation remained benign against the backdrop of slowing domestic and global economic growth.
Information released Wednesday by the U.S. Labor Department revealed its Consumer Price Index rose 0.4%, boosted by increases in the costs of food, gasoline and rents. That was the biggest advance since January 2018 and followed a 0.2% gain in February.
In the 12 months through March, the CPI hiked 1.9 percent. The CPI gained 1.5% in February, which was the smallest rise since September 2016. Economists had forecast the CPI climbing 0.3% in March and accelerating 1.8% year-on-year.
Inflation has remained muted, with wage growth increasing moderately despite tightening labour market conditions. The tame inflation environment, together with slowing economic activity, support the Federal Reserve’s decision last month to suspend its three-year campaign to raise interest rates, after increasing borrowing costs four times in 2018.
Excluding the volatile food and energy components, the CPI eked up 0.1%, matching February’s gain. In the 12 months through March, the core CPI increased 2%, the smallest increase since February 2018. The core CPI rose 2.1% year-on-year in February.
The Fed, which has a 2% inflation target, tracks a different measure, the core personal consumption expenditures (PCE) price index, for monetary policy. The core PCE price index increased 1.8% on a year-on-year basis in January after a rising 2% in December. It hit the Fed’s 2% inflation target in March last year for the first time since April 2012.
