US consumer prices rose for a second consecutive month in March as the costs of gasoline and shelter increased, the government reported Friday, signaling that some of the broader economic impact from cheaper oil is fading.
The Labor Department said its consumer price index (CPI) increased 0.2 percent last month. Inflation rose at that same pace in February, which ended three consecutive monthly declines caused largely by dropping oil and gasoline prices.
Price increases last month were fairly broad-based, suggesting the recent disinflationary trend had ended. In the 12 months ending in March, CPI fell 0.1 percent.
Excluding volatile energy and food costs, core prices rose 0.2 percent last month. The cost of housing, clothes, cars, and medical care increased, while food and airfare decreased. Core CPI has risen 1.8 percent in the past 12 months.
Several factors outside of gasoline suggest that inflation likely will continue to be tame. The stronger U.S. dollar has cut the cost of imported electronics, clothing, and other items. At the same time, average hourly wages have risen at an annual rate of only 2 percent, too low to cause a surge in consumer demand that would allow retailers to raise prices.
If gasoline prices hold steady, the annual inflation rate could begin to rise later this year. Economists are closely monitoring the possibility that inflation reaches the 2 percent Federal Reserve (Fed) target, a level considered manageable enough to encourage consumer activity while keeping prices relatively stable and protecting against deflation.
The recent low level of inflation has complicated the Fed's decision about when to increase short-term interest rates from historic lows. If inflation was close to the 2 percent target, it likely would enable the central bank to raise its key rate from near zero, where it has remained since late 2008.