US INFLATION slipped back in March as cheaper clothes and food helped to offset a jump in petrol prices, easing the immediate pressure on the Federal Reserve to raise interest rates.
The headline consumer prices index (CPI) came in at 0.9 per cent in the 12 months to March — down from a reading of one per cent in February, according to the US bureau of labour statistics.
The price of supermarket shopping dropped by its sharpest amount since April 2009, with cheaper fruit and vegetables pushing the so-called “food at home index” down 0.5 per cent over the month.
Prices at the pumps for American car owners edged up, however, by 2.2 per cent in March, though this will be of little concern to many off the back of a 13 per cent fall in February.
Inflation is expected to climb over the rest of the year, according to Paul Ashworth, chief US economist at Capital Economics, who is predicting it will go above 2 per cent by the end of the year.
“The two massive deflationary shocks that hit the economy last year — the stronger dollar and the collapse in global commodity prices — are now going into reverse.”
According to an analysis of futures trades by CME Group, markets believe there is a 16 per cent chance the Fed will vote for a rate rise when it meets in June, and only a 62 per cent chance that rates will have gone up by the end of the year.