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US consumer prices rise less than forecast in April

By Alexander Bueso

Date: Friday 12 May 2017

US consumer prices rise less than forecast in April

(ShareCast News) - The cost of living in the States slipped a tad lower last month with a partial rebound in energy prices offset by broad or flat prices across a wide swathe of categories, including for new vehicles, used cars and trucks and medical care commodities and services.
Headline consumer prices increased by 0.2% month-on-month and by 2.2% on the year, according to the Bureau of Labor Statistics, down from 2.4% in the month before.

Economists had penciled in a rise of 0.2% month-on-month and an annualised rise of 2.3%.

Energy prices gained 1.1% on the month following two consecutive months of declines, including a 3.2% drop in March.

At the core level, which excludes the more volatile food and energy components of the index, prices were ahead by 1.9% on the year, down from 2.0% in the month before.

Versus March core CPI was up by 0.1% after they dipped by an equal amount in March.

"The weakness in core CPI inflation, which dropped below 2% in April for the first time since October 2015, will give Fed officials some pause for thought but, with the unemployment rate at a decade low of 4.4%, we still anticipate another interest rate hike at the June FOMC meeting," said Paul Ashworth, chief US economist at Capital Economics.


"Today's data do not alter our view that the Federal reserve will tighten policy in June. Labor markets remain strong, and communications from FOMC members have been clear that they remain focused on a tightening policy path. We think softer-than-expected CPI prints for March and April are unlikely to deter the FOMC from action," Barclays's Blerina Uruci chipped in.

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