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After rising sharply in February, the CPI fell 2.2 percent on an annualized basis in March. As in February, energy price changes contributed prominently to the change in the overall index. The energy index fell 27.5 percent in March, leading, in part, to the decline in the CPI and reversing its increase of nearly 90 percent in February. Two prominent energy components, motor fuel and fuel oil, which saw the largest price changes among our 45 components in February, experienced double-digit price declines in March.
Excluding energy, the CPI rose 1.1 percent in March. Excluding both food and energy, the CPI rose 1.3 percent. These readings were in line with those from the Federal Reserve Bank of Cleveland’s (FRBC) measures. The Median CPI rose 1.1 percent in March, while the 16 percent trimmed-mean rose 0.7 percent. Notably, the apparent acceleration in the FRBC-based measures since December stopped in March. On a year-over-year basis, the FRBC measures and core CPI remain relatively stable and close to 2 percent, with the median CPI at 2.1 percent, the trimmed-mean at 1.7 percent, and the core CPI at 1.9 percent.
While energy price changes have been an important part of the story in recent months, more subtle shifts have also taken place. In January, nearly half of the items in the CPI’s market basket (weighted by expenditures) experienced price changes in the range of 1 percent to 3 percent, with nearly equal proportions—about 25 percent—above and below this band. In February, however, more items in the market basket shifted toward the right tail of the distribution, with almost 45 percent of the CPI seeing price changes at or above 3 percent during the month. This reversed in March, with about 40 percent of the market basket experiencing price changes of less than 1 percent. Which is more indicative of the underlying price trend remains to be seen.