WASHINGTON (AP) — U.S. consumer prices rose a modest 0.1 percent in March as a drop in grocery prices offset higher energy costs.
Excluding volatile food and energy prices, core consumer inflation also increased 0.1 percent, the smallest gain since August, the Labor Department reported Thursday.
Over the past year, overall consumer prices are up just 0.9 percent and core inflation 2.2 percent.
In December, the Fed raised the short-term rate it controls for the first time since 2006. The central bank was widely expected to raise rates several more times this year. But policymakers have proven reluctant to move quickly, given tame inflation rates and signs of weakness in the U.S. and world economies.
“The conclusion is a simple one: there’s no urgency for rate hikes if there’s no inflation,” said Guy LeBas, fixed income strategist at Janney Montgomery Scott, in a note to clients.
Grocery prices fell 0.5 percent in March, with cereal prices down 1.1 percent, the steepest slide since February 2006. Clothing prices dropped 1.1 percent, the most since September 1998. Men’s clothing prices fell by a record 2.5 percent.
Energy prices climbed 0.9 percent, with gasoline prices surging 2.2 percent.
The U.S. economy slowed at the end of 2015, growing at a lackluster 1.4 percent annual rate from October through December. Many economists believe it decelerated further in the first quarter to an annual growth rate of around 1 percent.