Shelter costs rose by 0.5 percent last month, and have risen at a 4.8 percent annual rate over the last quarter, the sharpest rate of increase since before the last recession. Higher energy prices have been a factor in the rapid rise in shelter costs insofar as these get reflected in hotel prices. This category lodging away from home, which includes hotels prices, has risen at a 9.1 percent annual rate in the last three months. But even the core rent and owners equivalent rent components are now rising at a 4.2 percent annual rate, reflecting the run-up in housing prices driven by stock wealth. Since the shelter component accounts for more than 39 percent of the core CPI, more rapid increases in shelter prices inevitably will push the core inflation rate higher.
Medical care continues to remain a problem sector.
Medical care costs rose by 0.4 percent in March, bringing the rate for the quarter to 6.2 percent. This compares to a 4.2 percent rate last year. There were some anomalies which pulled the index in opposite directions in March. Apparel prices rose by 0.4 percent, making their rate of increase over the quarter 3.4 percent. This will almost certainly be reversed in the next quarter, as apparel prices are probably still flat or moving downward slowly.