US consumer inflation grew slightly in March, with prices excluding energy and food rising at the slowest pace over the past 12 months in six years, while U.S. businesses increased their inventories for the second consecutive month, the government said in two reports Wednesday. The Labor Department reported that consumer prices rose 0.1 percent in March. Core inflation, which excludes volatile energy and food prices, was unchanged. The small overall increase was in line with expectations, while the flat reading for core prices was better than the 0.1 percent rise expected by economists. Over the past 12 months, core consumer inflation is up by only 1.1 percent, the best 12-month performance since a similar 1.1 percent rise for the 12 months ending in January 2004. The slow rise in core prices has not been lower in more than four decades. However, household budgets remain under pressure, the department said. Average hourly earnings fell 0.1 percent in March, and after adjusting for the small rise in inflation, earnings were down 0.2 percent for the month. Over the past year, hourly earnings, adjusted for inflation, are down 0.6 percent as the lingering effects of the worst recession in seven decades continue to depress wages. Meanwhile, the Commerce Department reported that business inventories rose 0.5 percent in February after increasing by 0.2 percent the previous month. The increase was bigger than analysts had expected and the biggest since July 2008, before the financial crisis intensified. Factories, retailers, and wholesalers sharply reduced inventories during the recession as sales plunged. Economists now hope sustained gains in sales will persuade business to rebuild their inventories, triggering increased factory production which would support the economic recovery.
