Core inflation in US cools

New york: A key measure of US inflation rose less than forecast in March on a drop in apparel prices following a methodology change for data collection, offering some reinforcement for the Federal Reserve’s message of patience on interest rates. The core consumer price index, which excludes food and energy, rose 0.1 per cent from the prior month, and 2 per cent from a year earlier, according to a Labor Department report Wednesday. Those readings missed both the monthly and annual estimates of economists, while the broader CPI climbed 0.4 per cent as forecast and a faster-than-estimated 1.9 per cent annually. Yields on 10-year Treasuries fluctuated immediately after the report was released, before moving lower. Wednesday’s numbers likely reflect some effects from new data collected directly from a department store company, which the March report incorporated for the first time.

Economists at NatWest Markets Securities Inc., Societe Generale SA and Goldman Sachs Group Inc. had projected the change could cause a drag from apparel on the broader measure.

Apparel prices fell 1.9 per cent from the prior month, the most since 1949, and were down 2.2 per cent from a year earlier. The category accounts for 3.1 per cent of CPI.


“Apparel prices can be volatile,” said Gus Faucher, chief economist at PNC Financial Services Group.