Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       

Blog Home
   Brian Wesbury
Chief Economist
X •  LinkedIn
   Bob Stein
Deputy Chief Economist
X •  LinkedIn
  The Consumer Price Index (CPI) increased 0.3% in March
Posted Under: CPI • Data Watch
Supporting Image for Blog Post

Implications: Consumer inflation came in exactly as the consensus expected in March, up 0.3% overall and 0.2% if you exclude food and energy. Energy prices led the way as prices at the pump continued to move higher.  In the past three months, energy prices have risen at an 18.3% annual rate while overall consumer prices are up at a 3.7% annual rate.  However, prices for both energy and the overall CPI were up even faster in the same three months in 2011. As a result, year-ago price comparisons have actually been decelerating. Back in October, consumer prices were up 3.6% from a year ago; now prices are up 2.7% from a year ago.  This deceleration may continue for another month or so, which means prices will still be rising, but not as quickly as they were the same time a year ago.  However, do not expect the respite from higher inflation to last.  "Core" inflation, which excludes food and energy, has continued to trend upward. Back in October, core prices were up 2.1% from a year ago; now they're up 2.3%, which is above the Federal Reserve's target of 2%. Meanwhile, monetary policy is very loose and housing costs (which are measured by rents, not asset values) are rising.  Owners' equivalent rent was up 0.2% in March and is up 2% versus a year ago. The ongoing shift from home ownership toward rental occupancy should boost this inflation measure even more in the year ahead.  With loose monetary policy and housing costs accelerating, it's hard to see core inflation getting back down to the Fed's 2% target anytime soon.  On the earnings front, "real" (inflation-adjusted) wages per hour were down 0.1% in March.  Although these earnings are down 0.6% from a year ago, the number of hours worked is up 2.5%, giving consumers more purchasing power.  No justification here for a third round of quantitative easing.

Click here for a PDF version.
Posted on Friday, April 13, 2012 @ 11:09 AM • Post Link Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
Follow First Trust:  
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2023 All rights reserved.