Consumer Prices Fall on Lower Gas Prices


The Bureau of Labor Statistics (BLS) reported that the Consumer Price Index – Urban Consumer (CPI-U) fell by 0.2% on a seasonally adjusted monthly basis in March. The last month-over-month decline in the CPI-U occurred in November 2012, when prices also fell by 0.2%. According to this month’s release, the monthly decline in the CPI-U largely reflected a decrease in energy prices, gasoline in particular. Following a 5.4% increase in February, the Energy Index fell by 2.6% in March. Gasoline prices, which rose by 9.1% in February, fell by 4.4%. Meanwhile, food prices were unchanged after rising by 0.1% in February. Core CPI-U, which excludes more volatile energy and food prices, grew by 0.1% in March. Over the past twelve months, CPI-U has increased by 1.5% while core CPI-U has grown by 1.9%.


NAHB constructs a real rent price index by deflating the price index for rent by the index measuring core inflation. This measure indicates whether inflation in rents is faster or slower than general inflation and provides some insight into the supply and demand conditions for rental housing, after controlling for overall inflation. When rents are rising faster (or slower) than general inflation the real rent index rises (declines). In March, real rental prices rose by 0.1%. Nominal rental prices rose by 0.2% while core inflation was 0.1%. As Chart 2 illustrates, real rental prices, which have been steadily increasing since June 2012, have surpassed the level established in May 2009.


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