Inflation Shows Signs of Life as Americans Gain Confidence

By bloomberg.com

Companies are starting to test their pricing power as American households become more confident the economic expansion will be sustained.
The cost of living excluding food and fuel rose 0.2 percent in March for a third month, reflecting broad-based gains in rents, medical care, clothing and used vehicles, a Labor Department report showed Friday in Washington. The University of Michigan said its preliminary consumer sentiment index for April climbed to the second-highest level in more than eight years.
The strengthening labor market that’s supporting confidence also may be prompting companies to charge customers more, easing concern that the jump in the dollar and slump in oil prices would ripple through the economy to push already weak inflation even lower. Federal Reserve policy makers want to see prices on a trajectory toward their 2 percent goal as they weigh the timing of their first interest rate increase since 2006.