The consumer price index rose .1% in March on a seasonal adjusted basis after increasing .4% in February according to the US Bureau of Labor Statistics. This is a sign of good news as lower month over month numbers combat an inflationary period, however, what was once deemed transitory has now stuck around longer than expected.
Shelter continues to be the largest contributor to the monthly all items increase. According to the BLS, Shelter was up .6% which is down .2% month over month and up 8.2% over the last 12 months unadjusted.
Used cars and trucks continue to show monthly declines as it is down 11.2% of the past 12 months. In February, used cars and trucks were down 2.8%, and in March the number was a bit less hot at .9%.
Another key take away from the report is food. Food away from home continues to be steadily higher month over month and remains 8.8% over the past 12 months. Food away from home has been .6% in January .6% in February and .6% in March which shows a steady increase in pricing. Food at home decreased in March down .3%, but was up 8.4% over the past 12 months.
The Fed is in a tough place right now. They are balancing a dual mandate, which is maximum employment and priced stability. As stated in previous blogs, price stability has now taken precedence, and they will do everything in their power to control pricing. At this juncture they could raise interest rates a bit further, yet they have to balance what a 25 to 50 basis point increase would do to the overall economy. The Fed has already seen what rising rates could do to multiple financial institutions, and will likely take a wait and see approach at this juncture.