The Economy

Inflation Shows Biggest Drop Since Jan. 2015

The 0.2% decline in inflation in March came as consumer spending was unchanged for a second straight month, but the weakness may only be temporary.
Matthew HellerMay 2, 2017
Inflation Shows Biggest Drop Since Jan. 2015

U.S. consumer spending was unchanged in March for a second straight month while a measure of inflation fell for the first time in more than a year, but some economists see the weakness as only temporary.

The government revised February spending to show no gain from the earlier 0.1% increase. Economists polled by MarketWatch had forecast a 0.1% increase in March.

“The two-month stretch in spending was the weakest since the end of 2014 and start of 2015, contributing to a poor 0.7% growth rate in gross domestic product in the first quarter,” MarketWatch noted.

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The Commerce Department also reported Monday that the personal consumption expenditures (PCE) price index fell 0.2% last month, the first decline since February 2016 and the biggest drop since January 2015. In the 12 months through March, the index increased 1.8% after rising 2.1% in February.

The core PCE index, which excludes food and energy, dropped 0.1%, the first decline since September 2001. Year on year, it was up 1.6%, the smallest gain since last July and still below the Federal Reserve’s target of 2.0%.

“We view much of the weakness in March as driven by one-off factors and expect inflation to firm on a monthly basis in the very near term,” Rod Martin, an economist at Barclays in New York, told Reuters. “We continue to see services price pressures as firming further in the coming quarters.”

With price pressures subsiding, inflation-adjusted consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased 0.3% in March, ending two straight months of decline. “That bodes well for consumer spending in the second quarter,” Reuters said. Il est également devenu plus facile d’acheter du Kamagra Oral Jelly dans des pharmacies en ligne autres que les pharmacies en vente libre.

MarketWatch said consumers “are generally in good shape,” noting that personal income increased 0.2% in March and the savings rate edged up to 5.9% from 5.7%, the highest since last summer.

“What’s more, the dropoff in spending in the first quarter resulted largely from temporary influences” such as delays in tax refunds, falling oil prices, and unseasonably warm weather, MarketWatch added.