Consumer Price Index Remains Same for April
U.S. consumer prices in April showed no change for the first time in almost a year as costs fell for gasoline, clothing and air travel, government figures showed Tuesday.
The flat consumer price index followed a 0.7% rise in March, the Labor Department reported. The core rate of the consumer price index, which excludes food and energy costs, rose 0.2% after a 0.4% gain in March.
“Inflation at the retail level has yet to break out into a clear and dangerous upward trend,” said Joel Naroff, president of Naroff Economic Advisors in Holland, Pa.
Even so, Federal Reserve policymakers were taking no chances. The Federal Open Market Committee raised the overnight bank lending rate by half a point to 6.5%, the highest in nine years, and warned that consumer demand is at a level to put the economy at risk for higher inflation.
The Labor Department also said Tuesday that average weekly earnings adjusted for inflation rose 0.7% last month, after falling 0.5% in March.
The latest CPI report means that consumer prices rose 3% in the last 12 months. That’s down from a 3.7% year-over-year increase in March and up from 2.7% for all of last year.
Overall consumer prices also were unchanged in the five-county Los Angeles area during April. That was a departure from the strong 0.8% increases in both February and March.
Since April 1999, the region’s consumer prices are up 2.4%. Over the first four months of this year, consumer prices are up at an annualized rate of 2%.
Nationally, energy prices, which account for about one-tenth of the consumer price index, fell 1.9% during April after increasing 4.9% during March. The decline reflected easing in prices of crude oil and gasoline.
Transportation costs fell 0.7%, the largest decline since May 1997. April’s decline included a 0.5% drop in air fares.
Apparel costs fell 0.5%, after rising 0.3% in March. Compared with April of last year, clothing costs have declined 1.4%.
Analysts had expected the overall rate to rise 0.1% and the core rate to increase 0.2%. The last time the CPI was unchanged was in June.
Food prices, which account for about one-fifth of the index, rose 0.1% in April, matching March’s gain. Housing costs rose 0.1%, and the price of lodging fell 0.1% after rising 3.2% in March.
Medical care costs rose 0.3% in April, after rising 0.5% in March, and prescription drug prices rose 0.4%. Compared with April 1999, medical care costs have risen 3.9% and drug prices have increased 4.9%.
The cost of health insurance has begun to rise for businesses and consumers. Foundation Health Systems Inc., one of California’s biggest health insurers, said this month that its first-quarter profit rose 21% as it raised prices. The company increased premiums for commercial health plans an average 8%, compared with 6.7% increases a year ago.
Gasoline prices fell 4.1% in April--the largest drop since March 1991--after rising 11.1% in March. The average weekly price of a gallon of regular unleaded was $1.456 in April, down from the $1.516-a-gallon average in March, according to Department of Energy statistics.
Higher energy prices may show up again in the May report, though. Crude oil rose above $30 a barrel Monday for the first time in eight weeks as producers rebuffed calls from consumers for a rise in oil production when the Organization of Petroleum Exporting Countries meets in June.
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Consumer Price Index
Monthly percentage change, seasonally adjusted:
April: 0.0%
Source: Bureau of Labor Statistics
