Rise in core consumer prices stokes inflation fears
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WASHINGTON — U.S. consumer prices, excluding the volatile food and energy categories, rose 0.3
Overall consumer prices rose 0.5
Both measures show that inflation is mostly contained, but the increase in core prices will likely make investors nervous. Analysts are hyper-focused on whether faster price increases may cause the Federal Reserve to raise short-term interest rates faster than expected. Higher interest rates make it more expensive for consumers and businesses to borrow and spend and could slow growth.
"We think the increase in core inflation is a sign of things to come over the rest of the year," said Michael Pearce, U.S. economist at Capital Economics.
Pearce expects core inflation will reach nearly 2.5
Investors dumped stocks and bonds in the wake of the report, but stock indexes later rebounded. The Dow Jones industrial average ticked up 10 points by mid-day. The yield on the 10-year Treasury, a benchmark for mortgage rates, rose to 2.88
Inflation was largely dormant for most of the past decade, but inflation fears — at least in the financial markets — have roared back this year. It's a sharp shift from last year when consumer price growth slowed, even as the economy grew and the unemployment rate fell. These are rends that typically push inflation higher.
Fears of higher prices worsened earlier this month after a government report in early February showing wages grew in the past year at the fastest pace in eight years. That sparked a market sell-off that sent stock indexes down 10
Clothing costs jumped 1.7
Gasoline prices rose 5.7
Despite the market's jitters, inflation isn't yet much of a threat to consumers. The 1.8