Consumer prices up a modest 0.1% in March; food costs rise as energy drops

WASHINGTON - The Labor Department says U.S. consumer prices rose a modest 0.1% in March as a drop in grocery prices offset higher energy costs.

Excluding volatile food and energy prices, core consumer inflation also increased 0.1%, the smallest gain since August.

Over the past year, overall consumer prices are up 0.9% and core inflation 2.2%

Grocery prices fell 0.5% in March, with cereal prices down 1.1%, the steepest slide since February 2006.

Energy prices climbed 0.9%, the most since May. Gasoline prices surged 2.2%.

The Federal Reserve wants to steer inflation to a 2% annual rate. Given economic weakness in the U.S. and abroad, it has been reluctant thus far to follow a December interest rate increase with another move higher.

In a separate report, the number of Americans seeking unemployment benefits plunged last week, matching a March figure that was the lowest level since 1973.

The Labor Department says weekly applications for jobless benefits fell 13,000 to a seasonally adjusted 253,000. The four-week average, a less-volatile figure, dipped 1,500 to 265,000.

Applications are a proxy for layoffs. The historically low figures over the past year indicate a healthy job market. Employers so far are looking past recent economic sluggishness, with some analysts forecasting that growth may slide below a 1 percent annual rate for the first three months of 2016.

The low level of applications generally corresponds with monthly net job gains for more than 200,000. Applications have been below 300,000 for 58 straight weeks, the longest consecutive period since 1973.