WASHINGTON—On a seasonally-adjusted basis, overall consumer prices increased 0.4% in March. NAFCU Chief Economist and Vice President of Research Curt Long the numbers are yet another indicator the Federal Reserve will raise interest rates this year.
"The CPI increased by 0.4% in March from the previous month, the largest increase since January 2018," said Long in a NAFCU Macro Data Flash report. "The energy index was primarily responsible, surging by 3.5% during the month, but core inflation remains subdued. PCE inflation – which is the Fed's preferred measure – is still well below the Fed's 2% target. This is a chief reason why the Fed has elected to pause rate hikes.
"Even readings that are modestly above that level may not lead to immediate rate hikes, as officials have said that they are willing to accept above-target inflation for a time given the lengthy period that price growth has failed to meet that mark,” continued Long. “Given where things currently stand, NAFCU sees no compelling reason to expect a rate hike this year."
Below 2% Over Last Year
According to data published by the Bureau of Labor Statistics, the overall CPI stayed at 1.9% over the 12-month period.
Core prices (excluding food and energy costs) increased 0.1% in March compared to the previous month. Year-over-year core CPI growth was 2%.
Energy prices increased 3.5% in March following a 0.4% increase in February. From a year ago, energy prices were down 0.4%. Food prices rose 0.3% in March. On a year-over-year basis, food prices were up 2.1%, Long said.