Wholesale prices show hint of inflation

Wholesale prices show hint of inflation

A key measure of USA inflation accelerated to the highest in a year as a drag from mobile-phone costs faded, bearing out the Federal Reserve's forecast for a pickup in price gains.

CPI slipped 0.1% versus a month ago.

Gasoline prices tumbled 4.9 percent in March, the largest drop since last May, after falling 0.9 percent in February.

The Bureau of Labor Statistics report shows prices for new cars and trucks showed no increase in March, while prices of used vehicles fell 0.3 percent.

Last year's weak cellphone services prices are also expected to fall out of the calculation for March PCE price index data, which is scheduled for release on April 30.

"Although core CPI is back above 2%, the slight monthly uptick in price pressures should still leave core PCE tracking a little below 2% and therefore does not change our view of the Fed hiking two more times over the remainder of the year", she said. That was the largest annual gain in a year and followed February's 2.2 per cent increase. Annual inflation is rising as the weak readings from a year ago drop from the calculation.

Core inflation, which excludes energy and unprocessed food products, climbed to 0.8 percent from 0.6 percent.

Crude Gains as Trade Tensions Ease
Analysts said Xi's comments greatly relieved market anxiety for a potential trade war between the world's two largest economies. Among refined products, May gasoline rose 2.9% to $2.041 a gallon and May heating oil added 3.4% to $2.065 a gallon.

On a monthly basis, inflation increased 1 percent in March to record 269.8 points, compared to 267 points in February, CAPMAS said.

The CPI drop surprised analysts who had predicted a 0.1 per cent increase.

The Federal Reserve tracks a different index, the personal consumption expenditures price index excluding food and energy, which has consistently run below the central bank's 2 per cent target since mid-2012.

Analysts polled by Reuters had expected March producer inflation would moderate slightly to 3.2 percent. The U.S. central bank raised borrowing costs last month and forecast at least two more rate hikes in 2018.

The core CPI was lifted by rising rents and healthcare costs.

Average hourly earnings posted the biggest gain since July 2016, rising 0.4 per cent in March, following the 0.1 per cent decline in February, according to a separate report.

The price of alcoholic drinks and tobacco products increased by 1.3%, in particular those for tobacco goods by 1.7%, alcoholic drinks by 0.8%. Producer prices are called at 3.3%, slowing from 3.7% a month earlier.

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