WASHINGTON -- Consumer inflation pressures eased in March as gasoline prices dropped, which could add to fears of renewed deflationary pressure in the economy.
The consumer price index decreased 0.2 percent in March, led by lower energy and apparel costs, the Labor Department said Tuesday.
The decrease was larger than the 0.1 percent decline expected by analysts.
Core prices -- which exclude volatile food and energy costs -- increased 0.1 percent, softer than the 0.2 percent gain expected by economists surveyed by MarketWatch.
Energy prices decreased 2.6 percent in March, retracing half of the 5.4 percent rise in February. Gasoline prices fell 4.4 percent in the month. Electricity prices also declined.
Commodity prices, led by copper and gold, have been under pressure this week due to concerns that the global economy is slowing down. The lower prices have sparked some concern of deflation, or falling prices.
Food prices were flat in March, led by a drop in dairy prices. Apparel prices fell 1 percent, the largest drop since April 2001.
The only big gain came in prices for used cars and trucks.
In the past year, the CPI has risen 1.5 percent -- the slowest year-over-year growth since July. The core CPI has gained 1.9 percent.
"It remains our view that core inflation has peaked on a year-over-year basis and will be stable to slightly lower in coming quarters as soft global growth weighs on pricing power," said Josh Shapiro, U.S. economist at MFR Inc.
Economists said the combination of tame inflation, tighter fiscal policy and a soft patch in the economic data should allow the Federal Reserve to maintain its bond-buying program at its current $85 billion pace.
The Fed's interest-rate setting committee will meet again for two days on April 30-May 1.
"The bottom line is simply that the moderating pace of consumer price inflation is continuing to provide a very supportive backdrop for the Fed's current easing bias," said Millan Mulraine, an economist with TD Securities.