The sub-indexes of gasoline and food, considered to be volatile components, rose 3% and 0.3%, respectively. Adjusted for these two items, core consumer prices moved up 0.1%, clocking the third consecutive monthly increase. On a 12-month basis, the core inflation was 2.1%, which stayed above the central bank’s unofficial target of 2% for the second month in a row.
Last month’s rise in prices followed a 0.1% decline in March, which was the first negative movement in six months
Household furnishings, personal care and apparel were the other components that showed an uptick in April. The automobile segment registered a decline and the sub-index for medical care advanced at a slower pace last month, restricting the overall growth.
Going ahead, fuel prices are expected to rise further in the coming months, in line with the surge in crude oil prices that followed the government’s decision to withdraw from the nuclear deal with Iran.
In a separate report, the Labor Department today said the number of jobless claims stayed unchanged at 211,000 in the week ended May 5, which is the lowest in nearly 48 years. Economists were expecting an increase. Recent data had revealed that unemployment rate dropped to a 17-year low of 3.9% in April, while hiring softened in March and April after rising sharply in February.
Taking a cue from the tightening labor market and growing inflation pressure, amidst higher fuel prices, the Fed will likely hike short-term interest rates a couple of more times this year. Meanwhile, there are chances of a third rate hike if inflation pressures persist in the long term.