Both headline inflation and core inflation accelerated in March as the economy reopens from the COVID-19 recession.
The Bureau of Labor Statistics (BLS) reported that the Consumer Price Index (CPI) rose by 0.6% in March on a seasonally adjusted basis, after an increase of 0.4% in February. It marks the biggest increase since June 2009. Excluding the volatile food and energy components, “core” CPI increased by 0.3% in March, after an increase of 0.1% in February. While the indexes for shelter (0.3%), recreation (0.4%), medical care (0.1%), and motor vehicle insurance (3.3%) all rose over the month, the indexes for apparel (-0.3%), and education (-0.2%) declined.
Energy prices continued to increase at a fast pace in March. The price index for a broad set of energy sources increased by 5.0%, after a gain of 3.9% in February. It marks the biggest monthly increase since September 2017. The increase in energy prices accounted for nearly half of the seasonally adjusted increase in overall prices. The food index rose by 0.1% in March, after a 0.2% increase in February. The indexes for food at home and food away from home both rose by 0.1% in March.
During the past twelve months, on a not seasonally adjusted basis, the CPI rose by 2.6% in March, the biggest increase since August 2018. Meanwhile, the “core” CPI increased by 1.6% over the past twelve months, faster than a 1.3% increase in February. The food index rose by 3.5% and the energy index rose by 13.2% over the past twelve months.
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).
In March, the Real Rent Index declined by 0.2%, after rising 0.1% in the previous three months. Over the first three months of 2021, the monthly growth rate of the Real Rent Index was virtually unchanged on average.