United States 'core' CPI falls short of forecasts in April

11 May, 2018, 01:21 | Author: Regina Lloyd
  • US wholesale prices up slightly, food costs down

The U.S. headline consumer price inflation rebounded sequentially in April after falling in March.

While rising gasoline prices are pinching Americans' wallets, fuel is providing only a modest boost to the broad CPI, which rose 2.5% in April from a year earlier.

At the "core" level meanwhile, CPI was ahead by 0.1% on the month and up by 2.1% on the year, with both the monthly and annualised rates of change printing a tenth of a percentage point below forecasts.

Food prices have also been mostly tame, rising just 1.4 percent in the past 12 months.

The core CPI reading brought the three-month annualized gain to 1.8%, the lowest since July, after 2.9%.

The April number was below the consensus estimate of 0.3% and followed a decline of 0.1% in March. Other gauges broadly show stronger inflation in the U.S. The Commerce Department said last week its price index for personal-consumption expenditures was up 2% from a year earlier in March. Hotel and motel rates, which had posted an outsize gain in March, rose 0.8% in April.

American drivers paid more for gas, but overall consumer prices rose only modestly in April, a sign that inflation remains mild. Those numbers indicate moderate inflation, but the 12-month increase of 2.5% indicates steadily climbing inflation.

But with the labor market tightening and oil prices rising after President Donald Trump on Tuesday pulled the United States out of an global nuclear deal, promising to restore stiff sanctions on Iran, price pressures are expected to accelerate in the coming months.

The food index was rose 0.3%.

The cost of recreation fell 0.4% last month, the biggest decline since December 2009.

Economists had penciled increases of 0.3% and 2.5%, respectively.

In a second report on Thursday, the Labor Department said initial claims for state unemployment benefits were unchanged at a seasonally adjusted 211,000 for the week ended May 5. The jobless rate is within striking distance of the Fed's forecast of 3.8 per cent by the end of this year.

But many economists who remain skeptical that inflation will accelerate, even in the current job-rich environment. And expected increases in gasoline prices this summer will add to the inflation pressures. Prices for used cars and trucks tumbled 1.6 per cent in April, the largest drop since March 2009. There were also decreases in the cost of airline tickets, new motor vehicles and communications.

This story has not been edited by Firstpost staff and is generated by auto-feed.



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