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Consumer prices rise 0.2%, Americans paying more for food and rent

This will come as some good news to the Fed, which worried that the country may slip into deflation.
By Ananth Baliga   |   April 15, 2014 at 12:44 PM

WASHINGTON, April 15 (UPI) -- Americans paid more for food and rent as the consumer price index inched up by 0.2 percent for the month of March, as the Fed contemplates increasing rates.

With this 0.2 percent increase in consumer prices, the year-over-year inflation rate is now 1.5 percent, still below the Federal Reserve's threshold. The median forecast by 82 economists polled by Bloomberg estimated a 0.1 percent rise.

While food prices rose 0.4 percent, natural gas prices rose 7.5 percent, airfares rose 0.5 percent, and hospital services increased 0.8 percent, the largest rise was seen in rent or shelter costs, which accounts for nearly a third of the basket of goods and services tracked in the consumer price index.

Renters saw their rents go up 0.3 percent in March, bringing the yearly rise to 3 percent, double the inflation rate.

The Federal Reserve has suggested two percent inflation as the mark after which it will consider raising interest rates. The central bank wants to see inflation rise as it is a sign of healthy business activity. While the Fed has been careful not to indicate when it will start raising rates, many observers say it may not happen for at least another year.

“The overall picture is that inflation has stopped falling and is on a gradual uptrend,” said Thomas Costerg, an economist at Standard Chartered in New York. “To some extent, today’s numbers relieve fears about the U.S. slipping into deflation.”

[Bloomberg Businessweek]

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