FacebookTwitterRedditEmail

Consumer Prices Bounce Up, But Fears of Inflation Baseless

Nothing in this report should raise fears of inflation problems. We see some bounce back in prices depressed by pandemic, nothing more. Gas prices will be level or fall in April, lowering the overall rate.

Owners’ equivalent rent went up 0.2 percent in March, up 2.0 percent year-over-year. It had been rising over 3.0 percent in pre-pandemic months. The sharpest slowing of rental inflation is in the West. Owners’ equivalent rent had been rising more than 4.0 percent year-over-year, but now it is down to just 1.6 percent.

+ A big jump in energy prices pushes the overall Consumer Price Index (CPI) up 0.6 percent in March. Core CPI rises by just 0.3 percent. Year-over-year, overall and core CPI are up 2.6 percent and 1.6 percent, respectively.

+ Prices for food and food away from home are both up just 0.1 percent in March, and up 3.3 percent and 3.7 percent, year-over-year, respectively.

+ Clothes prices fall again, down 0.3 percent in March and 2.5 percent year-over-year. We will likely see some bounce back in coming months.

+ New vehicle prices are flat for the second consecutive month, and up 1.5 percent year-over-year.

+ Used car prices rose 0.5 percent, after drops of 0.9 percent in each of the prior two months. Sharp rises last summer mean year-over-year prices are up 9.4 percent.

+ Another bounce back is in car insurance prices, up 3.3 percent in March, but still down 2.5 percent year-over-year. This increase is directly affected by the increased amount of driving (and more accidents).

+ Airfares begin to come back; up 0.4 percent in March, but down 15.1 percent year-over-year.

+ Hotel prices jumped 4.4 percent as part of a predictable bounce back, but they are still down 7.6 percent year-over-year.

+ College tuition is up 0.1 percent in March, and up 0.3 percent year-over-year. More increases are likely in the fall as schools return to in-person class instruction.

+ Prescription drug prices were flat in March after falling eight straight months, and are down 2.3 percent year-over-year. It is important to note that this does not include the price of new drugs.

+ Doctors’ services rose 0.3 percent in March, after sharp rises prior two months. Now doctors’ services are up 5.3 percent year-over-year.

+ Owners’ equivalent rent went up 0.2 percent in March, up 2.0 percent year-over-year. It had been rising over 3.0 percent in pre-pandemic months.

+ The sharpest slowing of rental inflation is in the West. Owners’ equivalent rent had been rising more than 4.0 percent year-over-year, but now it is down to just 1.6 percent.

This first appeared on Dean Baker’s Beat the Press blog.

Dean Baker is the senior economist at the Center for Economic and Policy Research in Washington, DC. 

FacebookTwitterRedditEmail