2018.04.1122:07:00UTC+00U.S. Consumer Prices Fell in March, but Core Inflation Remains Strong

U.S. consumer prices dropped for the first time in ten months in March, pulled down by a fall in the cost of gasoline, but core inflation continues to strengthen amid increasing prices for healthcare and rental accommodation.

Previous headline compared CPI to the core estimate increase of 0.2 percent.

According to the Labor Department, the Consumer Price Index declined 0.1 percent in March, the first and largest decline since May 2017, after rising 0.2 percent in February.

In the 12 month through March, the CPI increased 2.4 percent. That was the largest annual gain in a year and followed February's 2.2 percent increase. Annual inflation is rising as the weak readings from last year drop from the calculation.

Excluding food and energy, the core consumer-price index increased 2.1 percent from March 2017, the most in a year and matching the median estimate of economists, following a 1.8 percent gain in February, a Labor Department report showed.

The decline in the headline monthly inflation reading reported by the Labor Department is likely temporary as producer prices rose sharply in March.

Furthermore, the tightening labor market is seen to start generating significant wage inflation in the second half of the year. As such, many economists believe the Federal Reserve will hike interest rates three more times this year.

The U.S. central bank increased borrowing costs in March and forecast at least two additional rate hikes in 2018.