Decrease in U.S. Consumer Prices in March

Joseph Byrne Monday, April 22, 2013

According to LIBN (Long Island Business News), U.S. consumer prices decreased last month. The price per gallon of gas fell sharply, but food prices remained stable. This information is a little evidence that the sluggish economy is still keeping inflation at stable numbers.

The CPI jumped .7 percent in February and declined to .2 percent in March. This goes along with the gas prices, which went up 9.1 percent in February and fell 4.4 percent in March.

In four of the past five months, consumer prices have been stable or have declined, minus the month of February. Over the past year, consumer prices have risen 1.5 percent. This increase is the smallest that we have seen in the past eight months.

When you remove the volatile food and energy categories, prices only rose .1 percent and in the 12 months ending in March, rose only 1.9 percent. This gives the Federal Reserve ample evidence to continue what they are doing to stimulate the economy.

February saw the biggest jump in consumer prices in over three years. This is largely due to a sizable increase in the cost of energy. In addition, gas prices increased by the largest amount in more than 3 ½ years.

The Fed is trying to spur faster economic growth. They are keeping interest rates low and are buying about $85 billion in Treasury securities and mortgage-backed bonds to increase borrowing and spending numbers. Some economists are afraid that this could trigger higher inflation and other economic problems.

We will just have to wait and see what happens.

joeb@longislandyellowpages.com

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