Consumer prices rose 0.2 percent in March, in line with expectations and signaling that U.S. inflation may be firming up as the winter recedes.
Annual inflation was negative, at 0.1 percent, thanks to cratering energy prices.
But core inflation, a less-volatile gauge of inflation that strips out the effects of energy and food price changes, rose from 1.7 percent to 1.8 percent, the second straight monthly increase.
Over the past year, energy prices have fallen by roughly 20 percent. That decline has been led by a collapse in oil prices. The price of a barrel of Brent crude oil fell by roughly half, from nearly $110 last summer to $55 in January.
In recent months, however, oil has started to rise in price again, and is now near $65 a barrel.
That turnaround showed up in the seasonally-adjusted month-to-month change in March, when energy prices inched up 1.1 percent, led by oil and gasoline.
The movement of inflation is being closely watched by officials at the Federal Reserve, who are preparing to raise short-term interest rates for the first time since late 2008, tightening monetary policy.
At its most recent monetary policy meeting in March, the central bank announced that it would move to raise rates after further employment improvement and when Fed Chairwoman Janet Yellen and other officials were “reasonably confident” that inflation was moving up toward the Fed’s 2 percent goal.
The Fed’s preferred measure of inflation is not the Consumer Price Index, but a price index based on Personal Consumption Expenditures, stripping out the effects of energy and food to remove volatility. By that measure, core inflation was 1.4 percent in February, ticking up slightly after falling throughout the winter.
Yellen and other Fed officials have argued that recent low inflation is a product of falling energy prices and not a reflection of broader weakness in the economy, and will prove temporary.
