U.S. consumer prices advanced last month on strong growth in food and energy prices, but for a second-straight month underlying inflation stayed under control.
The consumer price index rose 0.4% in April, the U.S. Labor Department said today, compared to March’s 0.6% increase.
The core CPI, which excludes volatile food and energy prices, advanced just 0.2%, versus 0.1% in March.
Today’s data largely matched Wall Street forecasts. Economists had predicted a 0.5% CPI increase and 0.2% core rise.
Overall consumer inflation was up 2.6% from a year ago. The core CPI was up just 2.3% compared to a year ago, down 0.2 percentage point from March and the slowest annual pace since April 2006, when it was also 2.3%.
The figures support the prevailing view among economists that Federal Reserve officials will keep official interest rates unchanged when they meet late next month.
Both the core CPI and PCE have benefited from positive calendar effects. Last spring, core inflation numbers posted sharp increases, making for favorable year-on-year comparisons now.
Energy prices last month increased by 2.4%, according to today’s report, less than half the prior month’s rise. Gasoline prices jumped 4.7%. In contrast, natural gas prices fell 1%, while electricity prices rose just 0.1%. Food prices increased 0.4%.
The core index benefited from a 0.9% drop in airline fares and no change in new vehicle prices. Medical care prices increased 0.4%, following the previous month’s rise of just 0.1%, which was the lowest since August 2005. Prescription drug prices also rose 0.4%.
Housing, which accounts for 40% of the CPI index, rose 0.2% for a second-straight month.
In a separate report, the Labor Department said the average weekly earnings of U.S. workers, adjusted for inflation, decreased 0.5% in April. Average hourly earnings rose 0.2%. Average weekly hours decreased 0.3%.