Gas spike feeds inflation pain

Gas spike feeds inflation pain By Chris Isidore, senior writer


NEW YORK (CNNMoney) -- High gas prices caused inflation to rise at the fastest pace in more than a year in March.

The Consumer Price Index, the government's key inflation measure, rose 2.7% in March over year-earlier levels, according to Friday's report from the Labor Department. It was the biggest 12-month jump since December of 2009.

Meanwhile, so-called core-CPI, which strips out volatile food and energy prices and is considered a better long-term predictor of inflation, rose only 1.2% from a year ago, falling just short of forecasts.

While the core reading may have tempered inflation fears for some economists, it's no comfort for struggling consumers who are forking over a greater proportion of their disposable income on food and gas.

"Consumers are increasingly feeling the pinch of rising prices in part because food and gasoline are frequent purchases and price changes are easily detectable," said Jim Baird, chief investment strategist for Plante Moran Financial Advisors.

Gasoline was the major problem for consumers. Prices at the pump jumped 5.6% in March alone and are now 27.5% higher than a year ago.

Food prices jumped 0.8% in March -- the biggest one-month increase since July of 2008 -- leaving food prices 2.9% higher than a year ago.

The outlook for inflation


Overall prices jumped 0.5% in March, matching forecasts of economists surveyed by Briefing.com.

Economists, including those at the Federal Reserve, typically pay closer attention to core inflation readings. Numerous Fed officials have said they expect the increase in prices caused by higher food and gas prices to be transitory.

The core CPI reading is within the Fed's comfort zone, meaning it is unlikely to take steps to slow the economy in order to combat inflation. But the trend of rising price pressures outside of food and energy is still a concern to some economists.

"Today's report provides further evidence that prices across a broad range of goods and services are gradually beginning to rise," said Peter Newland, an economist with Barclays Capital, in a note to clients Friday. "Looking ahead, we believe that price pressures are gradually building and that the trend in core prices is firming." To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 17,810.06 91.06 0.51%
Nasdaq 4,712.97 11.10 0.24%
S&P 500 2,063.50 10.75 0.52%
Treasuries 2.32 -0.02 -0.86%
Data as of 11:46pm ET
Company Price Change % Change
Bank of America Corp... 17.12 0.12 0.71%
Kinder Morgan Inc 39.75 -0.17 -0.43%
Apple Inc 116.47 0.16 0.14%
Intel Corp 35.59 -0.36 -1.00%
Microsoft Corp 47.98 -0.72 -1.48%
Data as of Nov 21

Sections

This arrangement, announced Friday, illustrates how the lines have blurred between traditional TV networks and newfangled options like Netflix. More

The Obama administration is touting that its immigration action will boost wages. But the hike amounts to only $170 a year by 2024. More

Obama doesn't have the authority to create a startup visa, but part of his reform announcement could include a workaround for entrepreneurs: 'parole status.' More

Nearly half of all Americans say there's a chance they'll have to work during a holiday between Thanksgiving and New Year's, according to a new poll. And one in four say they'll have to work whether they want to or not. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.