U.S. Consumer Prices Rise 0.2% Amid Rebound In Energy Prices

CPI 051217

After reporting an unexpected drop in U.S. consumer prices in the previous month, the Labor Department released a report on Friday showing that prices rebounded in the month of April.

The Labor Department said its consumer price index rose by 0.2 percent in April after falling by 0.3 percent in March. The increase in prices matched economist estimates.

The uptick in consumer prices reflected a rebound in energy prices, which surged up by 1.1 percent in April after tumbling by 3.2 percent in March.

Gasoline prices jumped by 1.2 percent in April following the 6.2 percent slump seen in the previous month. Natural gas prices also spiked by 2.2 percent.

Excluding food and energy prices, core consumer prices inched up by 0.1 percent in April after dipping by 0.1 percent in March. Core prices had been expected to rise by 0.2 percent.

Higher prices for shelter and tobacco were partly offset by lower prices for wireless phone services, medical care, motor vehicle insurance, apparel, used cars and trucks, recreation, and new vehicles.

Consumer prices in April were up by 2.2 percent compared to the same month a year ago, reflecting a slowdown from the 2.4 percent growth seen in March.

The annual rate of growth in core consumer prices also slowed to 1.9 percent in April from 2.0 percent in the previous month.

Paul Ashworth, Chief U.S. Economist at Capital Economics, said, "To some extent, this new weakness in price inflation is due to competitive pressures rather than weak demand, so the Fed can afford to discount it."

"But even under those circumstances, it increases the downside risks to our above-consensus view that the Fed will hike interest rates three more times this year," he added.

On Thursday, the Labor Department released a separate report showing a bigger than expected increase in producer prices in the month of April.

The Labor Department said its producer price index for final demand climbed by 0.5 percent in April after edging down by 0.1 percent in March. Economists had expected prices to rise by 0.2 percent.

With the monthly increase, the annual rate of producer price growth accelerated to 2.5 percent in April from 2.3 percent in March. Prices rose at the fastest rate since February of 2012.

Excluding increases in food and energy prices, core producer prices still rose by 0.4 percent in April and were up by 1.9 percent year-over-year.

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