According to data released by the Bureau of Labour Statistics today, the Consumer Price Index (CPI) revealed headline inflation rose 0.1% over last month and 5.0% over the prior year in March, (0.4% month-over-month increase and 6% annual gain in February).

Both measures were slightly better than economist forecasts of a 0.2% month-over-month increase and 5.1% annual increase.

On a “core” basis, which strips out the more volatile costs of food and gas, prices in March climbed 0.4% over the prior month and 5.6% over last year (In-line with economist expectations).

The moderating price pressures showed today combined with signs of cooling in the labour market are expected to offer a temporary reprieve to markets.

However, core inflation remains far above the Fed’s target of 2% (CPI is likely to end the year above 3%).

This data support economist opinion that the FED will increase interest rate of 0.25% in May.

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