Inflation Watch: Year-Over-Year Headline And Core CPI Little Changed

The Bureau of Labor Statistics released the CPI data for last month this morning. Year-over-year Headline CPI came in at 2.65%, which the BLS rounds to 2.7%, down fractionally from 2.87% last month. Year-over year-Core CPI came in at 2.26%, which the BLS rounds to 2.3%, up from 2.18% last month.
 
Here are excerpts from the BLS summary:
 
The indexes for food, energy, and all items less food and energy all increased in March. The gasoline index continued to rise, more than offsetting a decline in the household energy index and leading to a 0.9 percent increase in the energy index. The food index rose 0.2 percent as the index for meats, poultry, fish, and eggs increased notably.

The index for all items less food and energy rose 0.2 percent in March after increasing 0.1 percent in February. Most of the major components increased in March, with the indexes for shelter and used cars and trucks accounting for about half the total increase for all items less food and energy. The indexes for medical care, apparel, recreation, new vehicles, and airline fares increased as well, while the indexes for tobacco and household furnishings and operations were among the few to decline in March.

The all items index has risen 2.7 percent over the last 12 months, a decline from last month's 2.9 percent figure. The energy index has risen 4.6 percent and the food index has increased 3.3 percent; both increases are smaller than last month. In contrast, the 12-month change in the index for all items less food and energy, which was 2.2 percent last month, edged up to 2.3 percent in March.More...
 
The Briefing.com consensus forecast for 0.3% for Headline and 0.2% Core month-over-month was spot on.
 
The first chart is an overlay of Headline CPI and Core CPI (the latter excludes Food and Energy) since 1957. The second chart gives a close-up of the two since 2000.

On this chart, I've highlighted the 2% level, which is generally understood to be the Fed's target for core inflation. Here we see more easily see the widening spread between headline and core CPI since late 2010, a pattern that began changing last October as headline inflation declined while core has continued to rise.

Federal Reserve policy, which focuses on core inflation, and especially the core Personal Consumption Expenditures (PCE), will see that the latest core CPI is fractionally above the target range.