Higher US gas prices spark modest March inflation: Labor Department
Rising gas prices in March led to a slight increase in inflation, a sign that some of the broader economic impact from cheaper oil is fading.
The consumer price index rose 0.2 percent in March, the Labor Department said Friday. Inflation moved at that same pace in February, which ended three straight monthly declines caused largely by falling oil and gasoline prices.
Prices at the pump rose 3.9 percent in March, contributing along with other sectors to a small dose of inflation. Still, gas remains relatively cheap, falling roughly 33 percent over the past year to an average price of US$2.41 a gallon, according to AAA’s Daily Fuel Gauge. Primarily because of less expensive gas, consumer prices dipped 0.1 percent in the 12 months ended in March, meaning that more Americans are able to conserve their spending.
Outside food and energy, core prices also rose 0.2 percent in March. The cost of clothes, housing, cars, and medical care increased, while food and airfare decreased. Core prices have risen 1.8 percent in the past year.
Several factors outside of gasoline suggest that inflation will likely continue to be subdued. The stronger dollar has slashed the cost of imported electronics, clothing and other items. The dollar has climbed in value against the euro and yen because the U.S. economy has experienced stronger growth than much of Europe and Japan. At the same time, average hourly wages have risen at an annual rate of just 2 percent, too low to cause a surge in consumer demand that would enable retailers to hike their prices.
If gas prices hold steady, the annual inflation rate could begin to rise later this year. Economists will be carefully monitoring whether inflation reaches the Federal Reserve’s target of 2 percent, a level deemed manageable enough to encourage consumer activity while keeping prices relatively stable and protecting against deflation.
After a two-day meeting last month, Fed policymakers said in a statement that it might be appropriate to raise rates after “further improvement in the labor market” and when they’re “reasonably confident that inflation will move back to its 2 percent objective over the medium term.”
US stocks join European dive
on Greece fears
US stocks dived in early trade Friday, following a sell-off in European equities as worries about Greece’s talks with creditors hung over markets.
About 30 minutes into trade, the Dow Jones Industrial Average was at 17,876.48, down 228.29 points (1.27 percent).
The broad-based S&P 500 fell 19.01 (0.90 percent) to 2,085.98, while the tech-rich Nasdaq Composite Index tumbled 59.70 (1.19 percent) to 4,970.70.
Negotiations between Greece and international creditors will resume Saturday in Brussels on reform requirements Athens needs to meet to receive its last payment of its bailout funds, the European Union said.
From left: Hesse state Governor Volker Bouffier , German Chancellor Angela Merkel, German Parliament President Norbert Lammert, , the partner of German president, Daniela Schadt, German President Joachim Gauck, and North Rhine-Westphalia Governor Hannelore Kraft attend a mourning ceremony at the Cologne Cathedral in Cologne, Germany Friday, April 17. A mourning ceremony was being held in the cathedral in memory of the 150 victims of the Germanwings plane crash last month in the French Alps.