Bloomberg News

Consumer Prices in U.S. Probably Rose at Slower Pace

April 13, 2012

A nozzle pumps fuel into the gas tank of a car in San Francisco. Photographer: David Paul Morris/Bloomberg

A nozzle pumps fuel into the gas tank of a car in San Francisco. Photographer: David Paul Morris/Bloomberg

The cost of living in the U.S. probably rose at a slower pace in March as the run-up in energy prices lost steam, economists said before a report today.

The consumer-price index increased 0.3 percent last month after rising 0.4 percent in February, according to the median forecast of 80 economists surveyed by Bloomberg News. So-called core prices, which exclude volatile food and energy costs, may have climbed 0.2 percent.

Companies like Levi Strauss & Co. and Jos. A. Bank Clothiers Inc. may find it difficult to keep raising prices as 12.7 million Americans remain unemployed, almost twice the number at the end of the last expansion. Less inflation would give Federal Reserve policy makers room to keep interest rates near zero to spur the economic recovery and boost employment.

“Inflation is going to moderate as the year moves forward given the sluggish demand outlook,” said Sam Bullard, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina. “There’s a lot of slack in the labor market that’s not permitting manufacturers and retailers to pass along costs to consumers.”

The Labor Department’s data are due at 8:30 a.m. in Washington. Economists’ estimates ranged from increases of 0.1 percent to 0.5 percent.

The median forecast would mean consumer prices climbed 2.7 percent over the past year, slower than the prior month and the smallest gain since March 2011. The core index is projected to increase 2.2 percent from March 2011.

Fed’s View

Fed officials, who’ve said energy costs will probably subside, have indicated they will hold off on more monetary stimulus unless prices rise more slowly than their 2 percent target or the economic expansion falters, according to the minutes of their March 13 meeting. Their preferred price gauge, issued by the Commerce Department and tied to consumer spending, rose 2.3 percent in the year ended in February.

“We expect this moderation of overall inflation to resume later this year,” Federal Reserve Bank of New York President William C. Dudley said April 12.

Fuel prices have already started to stabilize. The cost of a gallon of regular gasoline at the pump eased to $3.91 on April 11 from a 10-month high of $3.94 reached a week earlier, figures from AAA, the biggest U.S. auto group, show.

Fed Vice Chairman Janet Yellen endorsed the central bank’s “highly accommodative” policy this week, stating the Fed probably won’t meet its goal of full employment for years while inflation will remain in check.

Yellen on Jobs

“I anticipate that we will fall far short in achieving our maximum employment objective, and I expect inflation to remain at or below” the Fed’s goal, Yellen said in a speech in New York. Economic growth “will be sufficient to lower unemployment only gradually from this point forward,” Yellen said.

While the economy has added an average of more than 180,000 jobs since October, weaker employment gains last month signal labor market progress could be slowing. The slack evidenced by an 8.2 percent unemployment rate might then limit the success companies like Levi Strauss have had passing the cost of more expensive raw materials onto consumers.

“We pushed prices fairly aggressively during 2011 and still haven’t been able to fully cover all the cotton price increases, but we’re probably to the end of our ability to push pricing much further,” Blake Jorgensen, chief financial officer of the San Francisco-based company, said in an April 10 conference call with analysts.

Markups Difficult

Jos. A. Bank is in a similar situation.

“To date, we have been less successful in raising our out- the-door prices on some promotional product offerings” this year than last, R. Neal Black, president and chief executive officer at the Hampstead, Maryland-based retailer said on a March 29 conference call.

A Labor Department report yesterday showed while prices were little changed in March. The cost of imported goods, reported April 11, rose 0.8 percent.

The CPI is the broadest of the three monthly price measures from the Labor Department because it includes goods and services. About 60 percent of the CPI covers prices consumers pay for services ranging from medical visits to airline fares and movie tickets.

                       Bloomberg Survey
==============================================================
                              CPI     Core     Core  U of Mich
                                        CPI      CPI    Conf.
                              MOM%     MOM%     YOY%    Index
==============================================================
Date of Release              04/13    04/13    04/13    04/13
Observation Period           March    March    March  April P
--------------------------------------------------------------
Median                        0.3%     0.2%     2.2%     76.2
Average                       0.3%     0.2%     2.2%     76.3
High Forecast                 0.5%     0.2%     2.2%     78.5
Low Forecast                  0.1%     0.1%     2.1%     74.0
Number of Participants          80       80       35       70
Previous                      0.4%     0.1%     2.2%     76.2
--------------------------------------------------------------
4CAST                         0.3%     0.2%     ---      76.5
ABN Amro                      0.3%     0.2%     2.2%     77.0
Action Economics              0.3%     0.2%     2.2%     75.0
Aletti Gestielle              0.3%     0.2%     ---      76.1
Ameriprise Financial          0.3%     0.1%     2.1%     76.5
Banca Aletti                  0.4%     0.2%     ---      76.0
Bantleon Bank AG              0.4%     0.2%     ---      75.5
Barclays Capital              0.3%     0.2%     2.2%     77.5
Bayerische Landesbank         0.2%     0.2%     2.2%     76.0
BBVA                          0.3%     0.2%     ---      75.5
BMO Capital Markets           0.4%     0.2%     2.2%     76.6
BNP Paribas                   0.3%     0.2%     2.2%     75.5
BofA Merrill Lynch            0.2%     0.2%     ---      75.5
Briefing.com                  0.5%     0.2%     ---      75.5
Capital Economics             0.3%     0.2%     2.2%     78.0
CIBC World Markets            0.2%     0.2%     2.2%     ---
Citi                          0.3%     0.2%     2.2%     76.5
ClearView Economics           0.3%     0.2%     ---      75.5
Comerica                      0.4%     0.2%     ---      76.0
Commerzbank AG                0.2%     0.2%     ---      77.0
Credit Agricole CIB           0.3%     0.2%     ---      76.2
Credit Suisse                 0.1%     0.2%     ---      75.5
Daiwa Securities America      0.2%     0.1%     ---      75.0
DekaBank                      0.3%     0.2%     2.2%     77.0
Desjardins Group              0.2%     0.2%     2.2%     74.0
Deutsche Bank Securities      0.2%     0.2%     ---      77.0
Deutsche Postbank AG          0.4%     0.2%     2.2%     77.0
DZ Bank                       0.4%     0.2%     ---      76.0
Exane                         0.2%     0.2%     ---      76.0
Fact & Opinion Economics      0.3%     0.1%     ---      77.0
First Trust Advisors          0.3%     0.2%     ---      76.2
FTN Financial                 0.3%     0.2%     2.2%     76.0
Helaba                        0.3%     0.2%     2.2%     77.0
High Frequency Economics      0.3%     0.2%     ---      76.2
HSBC Markets                  0.3%     0.2%     2.2%     76.5
Hugh Johnson Advisors         0.3%     0.1%     ---      77.0
IDEAglobal                    0.3%     0.1%     2.2%     77.0
IHS Global Insight            0.2%     0.2%     ---      76.6
Informa Global Markets        0.4%     0.2%     ---      ---
ING Financial Markets         0.4%     0.2%     2.2%     77.0
Insight Economics             0.3%     0.2%     ---      76.5
Intesa Sanpaulo               0.3%     0.2%     2.2%     76.5
J.P. Morgan Chase             0.2%     0.1%     2.2%     76.0
Janney Montgomery Scott       0.4%     0.1%     2.2%     ---
Jefferies & Co.               0.3%     0.2%     ---      77.0
Landesbank Berlin             0.5%     0.2%     ---      75.7
Landesbank BW                 0.4%     0.2%     ---      75.5
Maria Fiorini Ramirez         ---      0.2%     ---      ---
Market Securities             0.1%     0.2%     ---      ---
MET Capital Advisors          0.5%     ---      ---      ---
Mizuho Securities             0.2%     0.1%     ---      76.0
Moody’s Analytics             0.2%     0.1%     ---      75.2
Morgan Stanley & Co.          0.2%     0.2%     ---      ---
National Bank Financial       0.5%     0.2%     ---      76.5
Natixis                       0.2%     0.1%     2.1%     77.0
Nomura Securities             0.2%     0.2%     ---      ---
Nord/LB                       0.3%     0.1%     2.1%     76.5
OSK Group/DMG                 0.2%     0.2%     2.2%     75.6
O’Sullivan                    0.2%     0.2%     ---      76.2
Parthenon Group               0.2%     0.2%     ---      78.5
Pierpont Securities           0.2%     0.2%     ---      78.0
PineBridge Investments        0.3%     0.2%     ---      78.0
PNC Bank                      0.3%     0.1%     ---      ---
Raiffeisenbank International  0.2%     0.2%     2.2%     76.5
Raymond James                 0.3%     0.2%     2.2%     76.0
RBC Capital Markets           0.2%     0.2%     2.2%     75.0
RBS Securities                0.2%     0.2%     2.2%     77.0
Scotia Capital                0.2%     0.1%     2.2%     ---
SMBC Nikko Securities         0.2%     0.2%     ---      78.0
Societe Generale              0.2%     0.2%     ---      78.0
Standard & Poor’s             0.3%     0.2%     2.2%     75.0
Standard Chartered            0.3%     0.2%     2.2%     76.6
Stone & McCarthy Research     0.3%     0.2%     ---      76.0
TD Securities                 0.2%     0.2%     2.2%     75.1
UBS                           0.2%     0.2%     2.2%     78.0
UniCredit Research            0.3%     0.2%     ---      76.2
University of Maryland        0.3%     0.2%     ---      76.2
Wells Fargo & Co.             0.4%     0.2%     2.2%     ---
WestLB AG                     0.4%     0.2%     2.2%     75.5
Westpac Banking Co.           0.4%     0.1%     ---      76.2
Wrightson ICAP                0.2%     0.2%     ---      75.5
=============================================================

To contact the reporter on this story: Alex Kowalski in Washington at akowalski13@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net


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