Consumer prices dip for first time in 13 months

April 19, 2017

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For the first time in more than a year, consumer prices fell across the board in March, a somewhat unexpected turn of events given inflation trends.

The consumer price index slipped 0.3 percent in March, according to the most recent analysis done by the U.S. Department of Labor, marking the first time the measure has fallen from the previous month since February of last year.

Also registering a decline was the all items index. Though it dropped by just a tenth of a percent, it's the first time there's been a dip of any kind in slightly more than seven years, the Labor Department reported.

The respective declines came as a surprise to economists. Prior to the Labor Department releasing the data on April 14, experts polled by the Wall Street Journal projected the consumer price index to hold in neutral territory and for the all items index to slightly increase, up 0.2 percent.

Unclear if dip is aberration or trend
Is this a sign of what's to come? Experts can't be sure, according to those interviewed by the Journal. If it's nothing more than a temporary blip, then the Federal Reserve is expected to raise rates later this year, as has been expected. But if the consumer price index falls again in April, the central bank may decide to keep short-term interest rates where they are for a while longer.

At the most recent Federal Open Market Committee meeting, the Fed raised interest levels by a quarter-percent, the first of what economists believe will likely be two more increases before 2017 concludes.

Investors more bearish than bullish
Meanwhile, investors on Wall Street are increasingly of the mindset that stock prices have hit their ceiling - at least for the time being. Just 29 percent of respondents in a poll done by the American Association of Independent Investors said they anticipated stock prices to increase further. This marks the second consecutive week that the share has been below 30 percent, a trend that was last witnessed in late October.

A stronger percentage of investors believe stock prices will fall than rise, with 37 percent having this bearish sentiment in the latest AAII Sentiment Survey. It's the ninth-straight week in which the rate has been above the historical 30.5 percent average, even though it's down from 39 percent who indicated as much in the previous week's poll.

The Dow Jones Industrial Average closed out the second full week of April on a down note heading into the long Easter holiday. On April 13, the Dow tumbled nearly 139 points from the previous trading day to 20,453.25. The Standard & Poor's 500 also sank, falling nearly 16 points to 2,328.95. The NASDAQ edged down as well to 5,805, off 31 points from 24 hours earlier.   

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