US consumer prices in March fell for the first time since February 2016, led by a decline in gas prices.
The consumer price index fell 0.3%, according to the Labor Department. Economists had forecast that the index was unchanged.
But excluding the volatile costs of food and energy, so-called core CPI fell 0.1%, the first decline since January 2010.
“The drop in the core rate was a shocker, however, given how rarely it occurs (even in recessions) and given the modest upward trend in inflation in recent years – with apparel and vehicle prices especially weak,” said David Berson, the chief economist at Nationwide.
The data demonstrated that inflation was uneven and may not be accelerating in the US as quickly as expected. Core personal consumption expenditures, which serve as the Federal Reserve’s preferred way to gauge inflation, rose above the 2% target in February for the first time since 2012.
“With the economy continuing to grow and labor and product markets tightening further, we expect inflation to move higher in the coming year – although, as illustrated by March’s surprisingly large drop, it will not be a one-way ride,” Berson said in a note.
A decline in the costs of wireless-phone services also weighed on consumer prices in March.
Shelter costs, recently a big driver of the overall index, increased by 0.1%, the smallest rise since June 2014, according to Bloomberg.