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First Cut: March CPI up on higher food and energy, shelter costs continue to rise

The Consumer Price Index (CPI) for March was up 0.4% month-over-month, pushed higher by steady increases in food and energy. Year-over-year the index was up 1.9%. Food prices were up 0.3% (up 2.1% year-over-year) as costs for fresh fruits and vegetables were up. Energy costs jumped 3.5% (down 0.4% year-over-year), mainly from sharp increases in gasoline (up 6.5%).

Excluding food and energy, the CPI was up only 0.1% in March from February. Year-over-year the index was up 2.0%. Shelter costs — which account for roughly a third of the overall index — also continued to keep consumer prices on an upward trend and rose 0.4% in March (up 3.4% year-over-year).

When the FOMC next meets on April 30-May 1, Fed policymakers will have renewed assurance that inflation is on a sustained path near the 2% objective over the medium term. Food and energy costs are among the most volatile and frequently cited of transitory factors affecting price stability. Energy prices have not fully retraced the declines in the fall of 2018, but are nearly done putting downward pressure on the year-over-year measure. Food costs are being affected by weather and by trade policy which is making it pricier to bring in some fresh foodstuffs.

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