US CPI Up 3.3% Y-o-Y in March, Gasoline Index Up, USD Drops


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- U.S. headline inflation rose in March as the Consumer 
Price Index (CPI) rose 3.3% year-on-year, posting a reading just below 
expectations but well above the prior month, as energy costs surged from the 
war in Iran.

   It was the highest annual inflation rate in almost two years and was below 
the market expectation of a yearly CPI growth of 3.4% in March versus 
February's 2.4% .

   Core inflation, as measured by the CPI's all-items less food and energy 
index, came in at 2.6%, versus an expectation of 2.7% after a 2.5% growth in 
February.

   Broader inflation itself has persistently remained above the Federal 
Reserve's long-term target of 2% per annum, undermining the central bank's 
rationale for interest rate cuts.

   The Fed, which relies more on the Personal Consumption Expenditures Index 
for its inflation readings, withheld a rate cut in March for a second time 
since the start of the year on inflation concerns. Its last cut of 25 basis 
points in December % left rates in a range of 3.5--3.75%.

   The March CPI data showed the energy index rising 10.9% over the month, 
after a mere 0.6% expansion in February.  That was driven primarily by a 21.2% 
increase in the index for gasoline as average pump prices in the U.S. stood at 
$4.12 gallon last week versus $3.516 a month ago, driven primarily by global 
oil supply disruptions triggered by the war in Iran, data from the Energy 
Information Administration showed.

   The surge in March energy costs also coincided with higher heating bills for 
many consumers in the U.S. amid rallying prices of natural gas, the main energy 
component used during the winter. Both natural gas and crude oil prices have 
remained higher since the start of March, responding to the Iran war that has 
disrupted the global supply chain in energy.

   By comparison, the food index rose by a more modest 2.7% year-on-year in 
March. The shelter index climbed by an annual 0.3%.

   On the heels of the latest CPI data, WTI crude oil for April delivery on 
NYMEX was down $0.29, or 0.3%, at $97.58 bbl by 8:55 a.m. ET.

   The U.S. dollar index fell by 0.114 points to 98.475 against a basket of 
currencies.




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