Energy Prices Rose Sharply in March

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The Bureau of Labor Statistics (BLS) released the Consumer Price Index for March. On a seasonally adjusted basis, the Consumer Price Index (CPI) rose by 0.4% in March, after a 0.2% increase in February. Excluding the volatile food and energy components, the “core” CPI increased by 0.1% in March, the same increase as in February.

The price index for a broad set of energy sources jumped by 3.5% in March, the highest gain in the past eighteen months. The food index rose by 0.3% in March, slightly slower than a 0.4% increase in February. The sharp increase in energy prices in March accounted for most of the increase in the CPI and widened the gap between overall and core inflation.

Despite decreases in indexes for apparel, used cars and trucks, airline fares and communication, increases in indexes for shelter, new vehicles, medical care, recreation and education contributed to the increase in the “core” CPI.

Over the past twelve months, on a not seasonally adjusted basis, the CPI rose by 1.9% in March, faster than a 1.5% increase in February. Meanwhile, the “core” CPI increased by 2.0% over the past twelve months, after rising 2.1% in February. It was the smallest gain since February 2018 on a year-over-year basis.

NAHB constructs a “real” rent index to indicate whether inflation in rents is faster or slower than overall inflation. It provides insight into the supply and demand conditions for rental housing. When inflation in rents is rising faster (slower) than overall inflation, the real rent index rises (declines). The real rent index is calculated by dividing the price index for rent by the core CPI (to exclude the volatile food and energy components).

The Real Rent Index rose by 0.3% in March, after rising 0.2% in February. Over the past twelve months, the monthly growth rate of the Real Rent Index was 0.1%, on average, slower than the average of 0.2% in 2017.



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