Getty Images
The numbers: The consumer price index fell slightly in March to mark the first drop in 10 months, but the decline was entirely due to the lower cost of gasoline. Americans paid more for almost everything else as inflation continues to creep higher.
The CPI dipped 0.1% last month, the government said Wednesday. That matched the forecast of economists surveyed by MarketWatch.
Yet the rate of inflation over the past 12 months rose again to 2.4% from 2.2% and hit a one-year high.
After stripping out gas and food, the more closely followed core rate of inflation advanced 0.2% in March. And the 12-month rate of core inflation jumped to 2.1% from 1.8%, the highest level in more than a year.
What happened: The cost of gasoline fell almost 5% in March after seasonal adjustments, though the decline in prices that consumers actually paid at the pump was considerably less.
The drop in energy prices alone is what turned the CPI negative for the first time since last May.
Food prices rose 0.1%.
The cost of other major household expenses such as rent and medical care rose more sharply, however, as did prices for plane flights and auto insurance.
Households did pay less for clothes and wireless-phone service.
Adjusted for inflation, hourly wages jumped 0.4% in March. They’ve risen just 0.4% in the past 12 months, however.
Big picture: The Federal Reserve is keeping a close eye on the rising rate of inflation. A steadily growing U.S. economy and the lowest jobless rate in 17 years are putting upward pressure on the cost of labor and raw materials. Recent tariffs and higher import prices are also adding to the mix.
If inflation climbs any faster, the central bank is likely to raise U.S. interest rates more aggressively. For now the Fed has penciled in three rate increases for 2018.
Market reaction: The Dow Jones Industrial Average DJIA, +1.79% and S&P 500 index SPX, +1.67% were both set to open sharply lower amid worries about a U.S. military strike in Syria and heightened tensions with Russia.
In the bond market, which is highly sensitive to inflation, the 10-year yield TMUBMUSD10Y, -1.57% fell several basis points.