Consumer prices post biggest jump in three years on higher gas costs
Consumer prices posted their biggest jump in more than three years last month as costs at the gas pump continued to rise, the Labor Department said Tuesday.
But underlying inflation slowed in April for the second straight month, providing conflicting signals for Federal Reserve officials weighing whether the economy is strong enough for another increase in a key interest rate.
The consumer price index increased 0.4% last month, up significantly from March’s downward-revised 0.1% gain. The last time prices jumped more in a month was in February 2013.
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Gas prices were the main reason for April’s surge, increasing 8.1% from the previous month. Gas prices were up 2.2% in March after having plunged 13% in February.
Falling oil prices that began about two years ago have helped push inflation down. But the price of oil has been rising in recent weeks, leading to an increase in what consumers pay at the gas station.
Overall energy prices increased 3.4% in April, after a 0.9% gain the previous month.
Food prices also increased last month, by 0.2%, after declining by 0.2% in March.
For the 12 months ended April 30, consumer prices increased 1.1%. That was a faster pace than the 0.9% increase for the 12-month period that ended March 31.
Still, the annual inflation rate remains low.
Fed officials have said lower oil prices have been temporarily keeping inflation down.
Core inflation, which excludes often volatile food and energy prices, was 2.1% for the 12 months ended April 30.
April was the second straight month that annual underlying inflation declined. The 12-month figure was 2.2% in March.
Fed officials want to see overall prices rising 2% a year.
Fed policymakers are watching inflation closely as they decide whether to enact another small increase in their benchmark short-term interest rate.
The rate has been between 0.25% and 0.5% since December, when Fed officials inched it up after keeping it near zero for seven years.
Central bank policymakers have indicated they would raise the rate by 0.25 percentage points twice this year. The Fed’s next meeting is June 14-15.
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