U.S. CPI inflation rose for the second month running in March as the drag from energy prices faded and core inflation was also solid. Headline CPI increased by 0.2% m/m in seasonally adjusted terms, slightly below consensus expectations (0.3%). Core CPI also rose by 0.2% m/m. Energy prices rose by 1.1% m/m, the second consecutive monthly rise, and suggest that the energy component of CPI has stabilized after seven months of falls since mid-2014. Food prices were a drag as expected, falling 0.2% on the month. On a y/y basis, total CPI fell 0.1% (0.0% previously) and core CPI accelerated to 1.8% (1.7% previously).Barclays says – “The Feb report confirms that the drag from lower energy prices on headline CPI is starting to fade; we should continue to see consecutive positive monthly prints in headline CPI from here and the y/y rate trending higher from the end of the summer. Core goods prices have been rising for two consecutive months now, against expectations of modest declines, and have provided some support to core CPI on top of the solid services inflation. However, we maintain that the headwind from the stronger dollar and second-round effects of lower energy prices are still ahead of us and are likely to weigh in inflation in the coming months.”
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