WASHINGTON - U.S. consumer prices rebounded in April amid increases in the cost of gasoline, food and rents, pointing to steadily rising inflation that could keep the Federal Reserve on track to raise interest rates next month.
The Labor Department said on Friday its Consumer Price Index rose 0.2 percent after dropping 0.3 percent in March.
The rise in prices suggested that March’s drop, which was the first in 13 months, was an aberration.
In the 12 months through April, the CPI increased 2.2 percent.
While that was a slowdown from March’s 2.4 percent increase, the year-on-year gain in the CPI was still larger than the 1.7 percent average annual increase over the past 10 years.
Economists polled by Reuters had forecast the CPI rising 0.2 percent last month and advancing 2.3 percent from a year ago.
The so-called core CPI, which strips out food and energy costs, edged up 0.1 percent last month after slipping 0.1 percent in March. The monthly core CPI was restrained by declines in the price of wireless phone services, medical care, motor vehicles and apparel.
The core CPI increased 1.9 percent year-on-year after rising 2.0 percent in March. April’s increase was above the 1.8 percent
average annual increase over the past decade.
The Fed has a 2 percent inflation target and tracks an inflation measure which is currently at 1.6 percent.
Still, April’s increase in consumer prices added to a tightening labor market and rising producer inflation in suggesting that the U.S. central bank could raise borrowing costs at its June 13-14 policy meeting.
The Fed increased its benchmark overnight interest rate by 25 basis points in March and has forecast two more rate hikes
for this year.
In April, rental costs increased 0.3 percent after a similar gain in March. Owners’ equivalent rent of primary residence rose
0.2 percent, matching March’s increase.
Gasoline prices jumped 1.2 percent after falling 6.2 percent in March. Food prices rose 0.2 percent, with the cost of food consumed at home increasing 0.2 percent amid a surge in prices of fresh vegetables.
The medical care index fell 0.2 percent last month.
The price of motor vehicle insurance fell 0.4 percent in April, ending a streak of 17 consecutive monthly increases.
Apparel prices fell 0.3 percent.
Reporting by Lucia Mutikani; Editing by Paul Simao