Credit, Economy and Financial News
Falling Energy Costs Keep Inflation in Check, but Core Inflation Increasing
The Labor Department reported that consumer prices edged
down 0.1% in March, as a drop in energy prices offset the
biggest rise in tobacco prices in more than a decade. Core
inflation, which excludes energy and food, rose 0.2% last
month, matching the gains of the past three months. Over the
past 12 months, consumer prices have declined 0.4%, the
first one-year decrease since a similar drop for the year
ending in August 1955. Over the past 12 months, core
inflation has increased 1.8%. The recession is expected to
tame inflation as job layoffs dampen wage pressures and weak
demand prevents companies from raising prices. But, pointing
to the rise in core inflation over the past year, some
economists worry that moves by the Federal Reserve to fight
the recession via stimulus measures could be paving the way
for inflation troubles down the road. In March, energy
prices fell 3%, gasoline prices declined 4%, home heating
oil plunged 8.5% and natural gas fell 4.8%. Food prices
dropped 0.1%. Most of the increase in prices outside of food
and energy came from an 11% jump in tobacco prices.
Meanwhile, the Labor Department said wholesale prices
fell 1.2% in March, following a 0.1% gain in February. The
decline was attributed to falling energy and food prices.
Gasoline prices plunged 13.1%, while the price of home
heating oil declined 13.2%, the sharpest drops for both
since December. Food prices fell 0.7%. Excluding food and
energy, wholesale prices were unchanged. Wholesale prices
have fallen 3.5% in the past year, the steepest drop in
almost 60 years. But excluding food and energy, the core
Producer Price Index has increased 3.8% in the last year.
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Date Last Updated: 04/20/2009
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