Consumer Prices Drop Sharply in March

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In March, the “core” CPI dropped for the first time in more than ten years, impacted by the COVID-19 pandemic.

The Consumer Price Index (CPI), released by the Bureau of Labor Statistics (BLS), declined by 0.4% in March on a seasonally adjusted basis, following an increase of 0.1% in February. It is the largest monthly decline in the CPI since January 2015. Excluding the volatile food and energy components, the “core” CPI declined by 0.1% in March, after a 0.2% increase in February. It is the first drop since January 2010. The index for shelter remained unchanged in March, following a 0.3% increase in February. The indexes for medical care services, used cars and trucks, and education increased over the month, while the indexes for airline fares, apparel, new vehicles decreased.

In March, the price index for a broad set of energy sources dropped by 5.8%, marking the third consecutive month of declines. It is the biggest drop since January 2015 when energy prices fell by 8.5%. All major energy indexes declined over the month. The gasoline index declined by 10.5%, while the electricity index and the index for utility gas service declined by 0.2% and 1.4%, respectively. Meanwhile, the food index increased by 0.3% in March, after a 0.4% increase in February. The indexes for food at home and food away from home increased over the month.

Over the past twelve months, on a not seasonally adjusted basis, the CPI rose by 1.5% in March, following a 2.3% increase in February. Meanwhile, the “core” CPI increased by 2.1% over the past twelve months, slower than a 2.4% increase in February. The food index rose by 1.9%, and the energy index declined by 5.7% over the past twelve month.



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