US consumer prices rebound 0.2 pct in April on jump in gasoline

US consumer prices rebound 0.2 pct in April on jump in gasoline

Consumer prices rose a less-than-expected 0.2 percent in April, with gasoline, housing, and food contributing most to the increase. The consumer price index has risen 2.5% in the past 12 months - the highest rate in 14 months.

For April, food costs fell 1.1 percent in April, the biggest decline since a 1.3 percent fall in August 2016. Those numbers indicate moderate inflation, but the 12-month increase of 2.5% indicates steadily climbing inflation.

US gold futures for June delivery settled up $9.30 at $1,322.30 per ounce.

Apparel prices rose and costs of household furniture increased 0.5 percent last month, the largest in three years. Food prices gained 0.3%, the highest increase in this category since March 2017.

Mobile phone plans have also gotten cheaper, falling 0.7 percent in the past year, as unlimited data plans have spread.

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. There is some residual seasonality in price measures in the USA, where hot price rises early in the year are followed by a period of weak readings. Used cars became more expensive after hurricanes a year ago destroyed thousands of cars in Texas and Florida. Investors in inflation-adjusted investments are also interested in non-seasonally adjusted inflation, which is used to adjust the principal balances of TIPS and set future interest rates for I Bonds.

Economists had forecast a 0.3 percent rise in the index.

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That means holders of Treasury Inflation-Protected Securities will see their principal balances climb 0.4% in June.

For investors in U.S. Series I Savings Bonds, the April inflation number is the first in a six-month series that will reset the I Bond's inflation-adjusted variable rate on November 1, 2018.

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

What this means for future interest rates. They said this moderation will allow the Federal Reserve to maintain its slow, gradual pace of raising interest rates.

In their policy statement last week, Fed officials said they expected annual inflation to run close to the "symmetric" 2 percent target over the medium term. Gasoline prices led the increase, growing 3.0%. Some Fed watchers have been cautioning that any lasting uptick in inflation or in economic growth might spur the Fed to pursue an additional rate increase before year's end.

I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article.

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