Inflation dormant in US
Inflation in the United States was dormant last month outside a jump in energy costs, while groundbreaking for new homes rebounded with surprising vigour after a big weather-related drop, the government said.
The Consumer Price Index, the most popular gauge of US inflation, rose 0.3% last month, the Labor Department said. However, excluding volatile food and energy prices, the CPI was flat - the tamest reading on so-called core inflation since it was last unchanged in February 1999.
"This is more good news on the inflation front. This is a very, very benign number. It's a sign of price stability," said Richard DeKaser, chief economist at National City in Cleveland. Economists had expected the CPI to rise 0.4% and the core index to edge up 0.2%.
A separate report showed housing starts leapt 8.3% last month - the largest gain since September - to a seasonally adjusted 1.780 million unit annual rate, well above the 1.694 million pace analysts had expected.
"Housing starts remain a bright spot in an economy that otherwise seems to be sputtering," said said Dana Johnson, the head of research at Banc One Capital Markets in Chicago.
Johnson and other analysts said the big jump marked an advance from a February level that had been temporarily depressed by unusually harsh winter weather.
Prices for US Treasuries rose a shade and the dollar softened after the data. Stock prices rose at the opening bell, as investors focused on welcome earnings from high-tech bellwethers Intel and Microsoft.
A 4.6% surge in energy costs accounted for more than 90% of the 0.3% rise in the overall CPI, Labor said.
Energy prices rose at an annual rate of nearly 77% over the last three months as oil prices spiked on a workers' strike in oil-rich Venezuela and worries over the potential for supply disruptions as the United States prepared for war against Iraq. However, oil prices began to drop sharply shortly before the war began.
While gasoline prices jumped 4.1% last month, an economist with Labor's Bureau of Labor Statistics said they were likely to be down about 8% in the CPI report for April due out next month, based on Energy Department data.
According to an Energy Department report released on Monday, prices at the pump have fallen 13.3 cents to an average $US1.595 a gallon from the record high reached four weeks ago, just before the United States began bombing Baghdad.