US consumer prices soft, underlying inflation pushes up
[WASHINGTON] US consumer prices moderated in April on weak gasoline prices, but rising shelter and medical care costs boosted underlying inflation pressures, which should keep the Federal Reserve on course to raise interest rates later this year.
The Labour Department said on Friday its Consumer Price Index slipped 0.1 per cent last month after increasing 0.2 per cent in March. In the 12 months through April, the CPI fell 0.2 per cent, the largest decline since October 2009, after dipping 0.1 per cent in March.
Economists polled by Reuters had forecast the CPI edging up 0.1 per cent from March and dipping 0.1 per cent from a year ago.
The so-called core CPI, which strips out food and energy costs, increased 0.3 per cent, the largest gain since January 2013, after advancing 0.2 per cent in March.
In the 12 months through April, the core CPI rose 1.8 per cent after a similar gain in March.
The upward thrust in core inflation should keep the US central bank on track to tighten monetary policy this year, despite what appears to be sluggish economic growth in the first half of the year.
A recent batch of weak data, including April industrial production and retail sales, has left many economists even doubting that the Fed will raise rates in September. The central bank, which has a 2 per cent inflation target, has kept overnight interest rates near zero since December 2008.
Gasoline prices fell 1.7 per cent in April after increasing 3.9 per cent in March. Food prices were unchanged after slipping 0.2 per cent in March.
Elsewhere, shelter costs increased 0.3 per cent after a similar gain in March. Shelter inflation could continue to rise in the months ahead as rising household formation pushes down rental vacancies.
The medical care index rose 0.7 per cent, the largest rise since January 2007. There were also increases in the cost of household furnishings, which posted their largest gain since September 2008.
REUTERS
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