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US Consumer Prices Dip In March But ‘Verizon Effect’ Leaves Inflation At 13-Month Highs

Courtesy of ZeroHedge. View original post here.

Consumer prices dipped MoM 0.1% in March (the biggest drop in a year)…

… even as Core CPI rose 0.2% M/M as expected, but the notable event this month was that the distortions of the “Verizon effect” have finally faded from the numbers, pushing annualized CPI YoY from 2.2% to 2.4% – the highest since Feb 2017.

As UBS notes, today’s CPI was effected by the ‘Verizon effect’, which was a statistical adjustment which lowered CPI without any prices actually falling. It is one reason the Fed does not focus on CPI. However, CPI is still the favored inflation measure of financial markets.

So which prices went up, and where did they drop?

  • The index for meats, poultry, fish, and eggs increased 0.8 percent in March.
  • The index for cereals and bakery products rose 0.4 percent, as did the index for nonalcoholic beverages.
  • The index for dairy and related products also rose in March, advancing 0.3 percent.
  • The fruits and vegetables index declined 0.7 percent in March
  • The shelter index increased 0.4 percent, with the indexes for rent and owners’ equivalent rent both rising 0.3 percent.
  • The index for lodging away from home increased 2.3 percent in March
  • The medical care index rose 0.4 percent, with the hospital services index rising 0.6 percent, the physicians’ services index increasing 0.2 percent, but the index for prescription drugs declining 0.2 percent.
  • The index for motor vehicle insurance continued to rise, increasing 0.3 percent.
  • The airline fares index increased 0.6 percent.
  • The indexes for alcoholic beverages and household furnishings and operations both increased 0.1 percent in March
  • The apparel index fell 0.6 percent in March
  • The index for communication declined 0.3 percent.
  • The used cars and trucks index fell 0.3 percent in March
  • The indexes for education and for tobacco also declined in March.
  • The gasoline index fell 4.9 percent in March
  • The index for natural gas also declined in March, falling 1.2 percent

While Shelter Inflation jumped from 3.1% to 3.3%, the growth in rental costs continued to slow.

How does this translate into inflation pressure at the micro level? The following heat map shows where inflation is “hottest” by corporate sector.


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