A Labor Department report showed that inflation has only increased at a glacial pace, as consumer prices in March dropped for the first time in more than a year.
The consumer-price index fell 0.3% in that month after increasing 0.1% in the previous month. The last time that the cost of living in the country has declined took place in February 2016. Lower prices for motor vehicles, clothing, and mobile phone plans reflected the lower index, as well as a 3.2% decline in energy prices.
On the other hand, food prices rose 0.3% in March, while housing costs increased 0.1% in the same period.
Some economists, however, remain skeptical about the start of a new trend, as the index may increase again in April.
A lower index in March should not be a sign for the start of a new trend, according to economist Ian Shepherdson. However, he said that if it happens again before the second half of 2017, then the Federal Reserve would less likely increase the interest rate in June.
While the Labor Department’s report indicated that consumer prices have declined in March, it’s probably safe for your company to continue in monitoring market developments. A resurging demand for consumer items worldwide and continually stable purchases have helped businesses reclaim some flexibility in pricing their products.
A competitive price monitoring system or a tracking tool like pricemanager.com will help your business stay update on recent developments surrounding consumer activity, regardless of a higher or lower index. Since enterprises including yours may have acquired some pricing power for their products and services, you can expect your rivals to adjust their pricing strategies.
A gradual increase in inflation has slightly lowered the cost of living in the U.S. in March. Is your business taking the right steps in adapting to this change?