After a temporary pause in February, US CPI inflation eased further in March. The annual rate of inflation slowed from 2.9% Y/Y to 2.7% Y/Y, exactly in line with expectations and the lowest level in one year. On a monthly basis, CPI increased by 0.3% M/M led by higher prices for energy (0.9% M/M), transportation (0.9% M/M), apparel (0.5% M/M), commodities (0.4% M/M) and medical care (0.3% M/M). Only prices for fuels and utilities dropped slightly in March. As a result, core CPI edged up again by 0.2% M/M, pushing the annual rate again higher to 2.3% Y/Y, from 2.2% Y/Y in February. While headline inflation has already slowed significantly, core inflation remains stubbornly high, suggesting that high prices for energy are feeding through in the core reading. The Federal Reserve is not too concerned about inflation and continues to focus on growth and unemployment.
According to the first estimate, University of Michigan consumer confidence weakened marginally in April. The headline index dropped from 76.2 to 75.7, while stabilization was expected. The details show that weakness was based in economic conditions (80.6 from 86.0), while the economic outlook sub-index (72.5 from 69.8) improved in April. 1-year ahead expectations eased significantly, from 3.9% to 3.4%, while 5-year ahead expectations stabilized at 3.0%. In the previous two months, the first estimate always surprised on the downside of expectations, but the final figure showed always a significant upward revision. Will this become a trend? Nevertheless, after a significant rebound in the second half of 2011, the index stayed broadly stable this year, but at historically rather low levels.