U.S. consumer prices fell in March for the first time in 13 months as declining costs for gasoline and mobile phone services offset rising rents and food prices.
The Labor Department said on Friday its Consumer Price Index dropped 0.3 %, the first decline since February 2016, after nudging up 0.1 % in February.
That lowered the year-on-year increase in the CPI to 2.4 % from 2.7 % in February. Economists polled by Reuters had forecast the CPI unchanged last month and slowing to a 2.6 % increase from a year ago.
The so-called core CPI, which strips out food and energy costs, fell 0.1 % last month, the first and largest decrease since January 2010, after rising 0.2 % in February. As a result, the year-on-year increase slowed to 2.0 %.
That was the smallest advance since November 2015 and followed a 2.2 % increase in February. The Federal Reserve has a 2 % inflation target and tracks an inflation measure which is currently at 1.8 %.
Rents increased 0.3 % last month after a similar gain in February. Owners' equivalent rent of primary residence rose 0.2 % after climbing 0.3 % in February.
Last month, gasoline prices fell 6.2 %, the biggest drop since February 2016, after falling 3.0 % in February. The cost of wireless telephone services dropped 7.0 %, the biggest drop on record. Food prices rose 0.3 %. The cost of food consumed at home increased 0.5 %, the biggest gain since May 2014.
Medical care increased 0.1 % last month, as the cost of doctor visits fell 0.3 %. Prices for hospital services rose 0.4 % and the cost of prescription medicine was unchanged.
Motor vehicle prices dropped 0.3 % after falling 0.2 % in February. Apparel prices declined 0.7 % last month after rising 0.6 % in February.