Consumer prices rebound 0.2% in April on jump in petrol

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Thursday, the U.S. Labor Department said its U.S. Consumer Price Index rose 0.2% in April, after decreasing 0.1% in March.

In the 12 months through April, the CPI increased 2.5 percent, the biggest gain since February 2017.

For April, food costs fell 1.1 percent in April, the biggest decline since a 1.3 percent fall in August 2016.

Looking into details on services, shelter inflation stayed healthy, rising 0.3 percent on the month.

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

Owners' equivalent rent of primary residence, which is what a homeowner would pay to rent or receive from renting a home, rose 0.3% last month after a similar gain in March.

An inflation gauge that the Fed tends to monitor most closely rose 1.9 percent in March from a year earlier, almost matching the Fed's annual inflation target of 2 percent. Apparel prices were also up 0.3%. Prices for used cars and trucks tumbled 1.6 per cent in April, the largest drop since March 2009. A more closely followed measure that strips out food and energy, known as the core CPI, rose a smaller 0.1% last month.

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Rising inflation is eating up more of USA workers' paychecks. Most major food categories showed declines in April.

Economists had forecast the CPI rebounding 0.3 per cent in April and the core CPI climbing 0.2 per cent.

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

Still, higher gas prices are being felt by many Americans, a trend that might restrain spending elsewhere in the months ahead. Because of the rise in oil prices, which broke $70 a barrel last week, consumers are paying significantly more for fuel than at this time previous year. "Today's number would not deter the Fed from hiking (interest rates) again next month".

Slower progress in core costs may make it much less doubtless that the Federal Reserve will speed up its rates of interest will increase. With annual headline and core inflation both running above 2.0%, the Fed knows that inflation has reached the moderate zone and bears watching.

However, the broad-based Underlying Inflation Gauge released by staff at the New York Fed later in the session showed inflation at 3.2 percent in April. That took inflation to 2.5 percent year-on-year, continuing its upward march since last June.

I wrote this article myself, and it expresses my own opinions. If inflation continues rising - which looks probable - the Fed will likely add a third increase this year. I have no business relationship with any company whose stock is mentioned in this article.