US consumer price index slips 0.1% in March, but core inflation firming

US consumer prices fell for the first time in 10 months in March, weighed down by a decline in the cost of gasoline, but underlying inflation continued to firm amid rising prices for healthcare and rental accommodation.
The drop in the headline monthly inflation reading reported by the Labor Department on Wednesday is likely temporary as producer prices increased solidly in March.

In addition, the tightening labour market is expected to start generating significant wage inflation in the second half of the year. As such, many economists believe the Federal Reserve will raise interest rates three more times this year.

The US central bank increased borrowing costs last month and forecast at least two additional rate hikes in 2018.

"US inflation is warming up rather than heating up," said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto. "Still, the upward trend could suffice to nudge the Fed three more times this year."

The Consumer Price Index slipped 0.1 percent last month, the first and largest drop since May 2017, after climbing 0.2 percent in February, the Labor Department said.

US consumer prices rise 0.5% in Jan; core CPI gains 0.3%, largest in a year

US consumer prices rose more than expected in January, with a measure of underlying inflation posting its biggest gain in a year, strengthening expectations that price pressures will accelerate this year and prompt a faster pace of interest rate increases from the Federal Reserve.

The fairly strong inflation report from the Labor Department on Wednesday could put more pressure on US financial markets, which were spooked by a surge in annual wage growth in January.

Inflation concerns sparked a sell-off on Wall Street and boosted benchmark U. S. Treasury yields to a four-year high.

There are fears that inflation, which is seen as being driven by a tightening labour market and increased government spending, could force the Fed to be a bit more aggressive in

US consumer prices unchanged as retail sales fall again

US consumer prices were unchanged in June and retail sales fell for a second straight month, pointing to tame inflation that could diminish prospects of a third interest rate increase from the Federal Reserve this year.

The soft domestic demand could also temper expectations of strong acceleration in economic growth in the second quarter.

The Labor Department said on Friday that the unchanged reading in its Consumer Price Index came as the cost of gasoline and mobile phone services declined further. The CPI's drop of 0.1 percent in May and the lack of a rebound in June could trouble Fed officials who have largely viewed the recent moderation in price pressures as transitory.

Policymakers are confronted with benign inflation and a tight a labor market as they weigh a third rate hike and announcing plans to start reducing the central bank's $4.2 trillion portfolio of Treasury bonds and mortgage-backed securities.

In the 12 months through June, the CPI increased 1.6 percent - the smallest gain since October 2016 - after rising 1.9 percent in May. The year-on-year CPI has been softening steadily since February, when it hit 2.7 percent.

Economists had forecast the CPI edging up 0.1 percent last month and climbing 1.7 percent from a year ago.

The so-called core CPI, which strips out food and energy

costs, edged up 0.1 percent in June, rising by the same margin for three straight months. The core CPI increased 1.7 percent year-on-year after a similar gain in May.
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