Consumer prices rose 2.0% year on year in March, the Central Statistical Office (KSH) reported on Tuesday.
Inflation rose to 0.7 percent in March from 0.6 percent in February. Food prices did go up on a month-on-month basis, particularly seasonal food items (potatoes, fresh vegetables and fruits) (+3.8%), pasta products (+1.7%) and rolls (+1.2%), while the cost of eggs dropped 6.5% and sugar cost 2.8% less for consumers.
U.S. consumer prices rose 2.4% year-over-year in March, making for their largest annual gain in a year. The costs of food, shelter, and medical care were all higher in March, but they were outweighed in the CPI by a 4.9 percent drop in prices at the pump.
The IMF said in a report earlier that it expected inflation to fall to 12 percent by June and to single digits by 2019.
The drop in energy prices alone is what turned the CPI negative for the first time since last May.
According to the agency, in annual terms (March 2018 to March 2017) the growth of consumer prices slowed down to 13.2% from 14% in February 2018 and 14.1% in January 2017.
Economists had forecast the CPI unchanged in March and the core CPI rising 0.2 per cent.
The Federal Reserve tracks a different index, the personal consumption expenditures price index excluding food and energy, which has consistently run below the central bank's 2 per cent target since mid-2012. But Ian Shepherdson of Pantheon Macroeconomics is among the economists who now expect four moves.
Most important, he wrote in a client note, "is whether this increase comes as a surprise to the public and materially raises peoples' inflation expectations".
Market reaction:The Dow Jones Industrial Average and S&P 500 index were both set to open sharply lower amid worries about a US military strike in Syria and heightened tensions with Russian Federation.
Gains in raw material prices slowed to 5.1 per cent in March from 5.9 per cent the month before. Food prices edged up 0.1 percent after being unchanged in February.
The core CPI's pickup will help reinforce the view of policy makers that inflation had been weighed down by transient factors such as the unusual weakness in the cost of wireless-phone services. Owners' equivalent rent of primary residence, which is what a homeowner would pay to rent or receive from renting a home, increased 0.3 per cent last month after climbing 0.2 per cent in February. The highest price increase of 6.8% on average was recorded for alcoholic beverages and tobacco.
That's not to say everything was cheaper last month.