The US consumer price index rose by 0.6% in March due to rising oil and gasoline prices, reports The New York Times.
Meanwhile, the index’s core prices, which exclude the energy and food
sectors, rose 0.4%, the largest rise in two and a half years. The new
figures are above the predicted headline rise of 0.5% and well above
the predicted core rise of 0.2%. Marketwatch reports that over the last twelve months the US headline CPI has risen 3.1%, whilst core prices have risen 2.3%.

The beige book, the US Federal Reserve’s summary of economic
conditions, reported that business activity continued to expand in the
US however the growth was uneven across the country. “‘Price pressures
have intensified in a number of Fed districts, and most report that
high or rising energy prices are a concern across sectors,’ the report
found.” (Reuters).

It’s widely expected that the Federal Reserve will increase the
benchmark short-term interest rate to 3 percent from 2.75 percent at
their meeting on May 3.

Henry says: “As US inflation exceeds expectations, equity markets fall
and bonds rally – clearly there are serious fears about the resilience
of US growth as well as the rise of inflation.”

Read more on Henry Thornton’s US economy watch here.

Peter Fray

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