USA core inflation accelerates as drag from phone costs fades

US consumer prices fell in March because of a rare drop in gasoline prices, but underlying inflation showed signs of picking up.

Inflation rose to 0.7 percent in March from 0.6 percent in February.

CAPMAS attributed the increase of inflation on a monthly basis to the rise of some commodities' prices, including vegetables by 3.9 percent, meat and poultry by 1.6 percent, fish and seafood by 5.2 percent, and fruits by 1.8 percent.

Over the last 12 months, inflation is running at a rate of 2.4 percent.

Analysts polled by Reuters had expected March producer inflation would moderate slightly to 3.2 percent.

However, the index's yearly gain suggests that inflation pressures may be picking up.

Chinese consumer and producer price inflation both undershot economist expectations in March, largely reflecting the unwinding of temporary impacts caused by Lunar New Year celebrations.

The IMF said in a report earlier that it expected inflation to fall to 12 percent by June and to single digits by 2019.

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The CPI drop surprised analysts who had predicted a 0.1 per cent increase. Profits at industrial firms picked up pace in the first two months of the year from December but still lagged growth for the whole of 2017.

That was in line with the flash data published on March 29.

Excluding the volatile food and energy components, the CPI climbed 0.2 per cent, matching February's increase. That measure-the price index for personal consumption expenditures-shows inflation continues to run below the Fed's target but is not far off.

"The numbers aren't yet alarming, but neither can we say with any confidence that (wholesale) inflation has peaked", said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

Market reaction:The Dow Jones Industrial Average and S&P 500 index were both set to open sharply lower amid worries about a USA military strike in Syria and heightened tensions with Russian Federation.

Gasoline prices tumbled 4.9 percent in March, the largest drop since last May, after falling 0.9 percent in February. That likely accounted for the big jump in the annual inflation rate last month. Food prices edged up 0.1 percent after being unchanged in February.

Healthcare costs increased 0.4 per cent, with prices for hospital care shooting up 0.6 per cent and the cost of doctor visits rising 0.2 per cent. Apparel prices fell 0.6 per cent after two straight months of robust increases.

  • Rita Burton