Consumer Prices Rise 0.2% in April

Higher costs for housing, cigarettes and medical care drove consumer prices up at the fastest rate in six months in April, but the rise did not tarnish a broader picture of mild inflation, the government said Thursday.

The consumer price index rose 0.2%, matching forecasts, after being unchanged in March, the Labor Department said.

The so-called core rate, excluding volatile food and energy costs, rose 0.3%, a bit faster than the 0.2% economists expected.

Special factors such as tobacco--up 3.8%, the most in more than 15 years--accounted for some of the rise. But such bread-and-butter categories as medical care and housing costs rose 0.4%.

A year’s worth of increases of that amount would add up to nearly a 5% inflation rate. And housing accounts for nearly 40% of the index and medical care, for more than 5%.

Meanwhile, two other reports--on unemployment claims and business inventories--implied the economy continues to grow strongly.

New applications for unemployment benefits totaled 307,000 last week, down 2,000 from the previous week, the Labor Department said.

Also, inventories rose 0.5% in March after a big 0.7% rise in February, the Commerce Department said. That would be a sign that businesses are having trouble selling goods, except that sales increased even faster, up 0.6% in March and 0.9% in February.

Despite the hints of trouble in Thursday’s price report, economists predicted Federal Reserve Board policymakers meeting Tuesday would hold rates steady.

April’s consumer price increase followed increases of 0.1% or no change in each of the previous four months, when energy costs declined steeply.

For the year’s first four months, inflation ran at a modest 0.9% annual rate. But, with further energy declines unlikely, inflation for the full year should about match 1997’s 11-year low of 1.7%.

A 33-economist panel of the National Assn. for Business Economics, in its quarterly forecast Thursday, predicted 1.6% inflation this year and 2.3% next year. Economic growth should subside from a rapid 3.8% last year to a still-healthy 3.1% this year to a moderate 2.2% next year, the panel said.

Associated Press and Reuters contributed to this report.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Consumer Price Index

Monthly percentage change, seasonally adjusted:

April: 0.2%

Source: Bureau of Labor Statistics