U.S. consumer prices rise slightly in March




Financial Markets

Brazil’s central bank continued to intervene the foreign exchange market on Thursday by selling $4 billion
of reverse currency swaps deigned to weaken the real’s value, bring the total intervention this week to
$18.3 billion. Beginning last month, Brazil’s policy makers started auction of reverse swaps to weaken
the currency in an effort to keep the real from strengthening so much that it impairs the competitiveness
of Brazils’ exports.

A rally in European government bonds was halted as the region’s inflation was revised higher and oil
prices climbed. German, Italian, and Spanish sovereign debt all retraced Wednesday’s gains. The yield
on Germanys’ 10-year bund climbed 3 basis points (bps) to 0.16 percent, after falling 4 bps on
Wednesday. Spain’s 10-year bond yields rose 4 bps to 1.5 percent, while similar-maturity Italian yields
added 6 bps to 1.36 percent.


Advanced Markets

U.S. consumer prices rose a modest 0.1 percent in March (m/m), after dipping 0.2 percent in February.
The rise was due mostly to a rebound in gasoline prices, which offset a drop in the cost of food. The core
consumer inflation, excluding food and energy prices, also increased 0.1 percent in March, down from a
0.3 percent gain in February. This was lower than the median forecast of 0.2 percent increase, reflecting
the smallest increase since August 2015.

For the third month in a row, the U.K.’s central bank maintained its benchmark rate at 0.5 percent and
similarly, left unchanged its scale of quantitative easing at £375 billion. This was expected by the
markets and it reflects concerns by the Bank of England about the uncertainty and economic outlook in
the event of a yes ‘Brexit’ vote.

The Euro Area inflation rate was zero percent in March (y/y), following a revised decline of 0.2 percent in
February. The core inflation increased by 1 percent in March, compared to modest decline of 0.8 percent
in February.


Emerging and Frontier Economies

Middle East and North Africa

Consumer prices in Qatar increased 3.3 percent (y/y) in March, at the same pace as in February, the
highest since September 2014. While prices of housing and utilities, transport and recreation and culture
went up, cost of food and health declined. On a month-on-month basis, consumer prices were
unchanged.

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Palestinian consumer prices rose 0.3 percent (y/y) in March, after a 0.9 percent rise in February. It is the
lowest inflation rate recorded since February 2015. Main upward pressure came from cost increases in
textiles, clothing and footwear, and alcoholic beverages and tobacco, while main decreases were
observed in transport and housing. On a monthly basis, consumer prices were near flat.

Sub-Saharan Africa

Mining production in South Africa shrank 8.7 percent (y/y) in February following a revised 5.5 percent
drop in January and larger than market expectations. It was the deepest fall since December 2012. On a
monthly basis, however, mining output rose 1.3 percent.




April 14, 2016



The Global Daily is an informal briefing on global economic and financial developments compiled by the
World Bank’s Development Economics Prospects Group. Recent issues, together with analysis of a
variety of macroeconomic topics, covered by the Group, may be found at:
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