The U.S. inflation rate rose by 2.7 per cent in the twelve months up to March, new data revealed Friday, a steady decline from the pace seen towards the end of 2011.
Inflation was relatively tame last month, as the Bureau for Labour Statistics reported America's consumer price index rose 0.3 per cent in March, below February's 0.4 per cent rise.
After stripping out large increases in volatile food and gas prices, the so called "core" rate came in at a 0.2 per cent monthly gain. Energy prices have gone up by 4.6 per cent, while food prices have gained 3.3 per cent over that period.
Prices for for shelter, medical care, apparel, recreation, new vehicles, used vehicles and airline fares increased, while the indexes for tobacco and household furnishings and operations were among the few to decline in March.
In the fall of 2011, the overall annual inflation rate peaked at 3.9 per cent. So a 2.7 per cent gain is an indication that inflation is under control. Policymakers generally like to see the inflation rate hover in a range between two and three per cent.
Mild price increases leave consumers with more money to spend, which boosts economic growth. Lower inflation also gives the Federal Reserve more leeway to keep interest rates low.
"Overall, the figures were broadly in-line with expectations and so market reaction should be limited," CIBC economist Andrew Grantham said in a note after the data was released.