WASHINGTON — American drivers paid more for gas, but overall consumer prices rose only modestly in April, a sign that inflation remains mild.
The consumer price index rose 2.5 percent in April from 12 months earlier, the Labor Department said Thursday. It was the sharpest year-over-year increase in 14 months. But excluding the volatile food and energy categories, the so-called core prices ticked up just 0.1 percent in April and 2.1 percent from a year earlier.
Declines in the cost of new and used cars, as well as for wireless phone services and cable television, offset higher prices for gas, rents, and medical services.
The overall consumer inflation rate has increased steadily since June, when it measured just 1.6 percent from a year earlier. Core prices, though, have risen more slowly.
April's mild increase may make the Federal Reserve less inclined to accelerate rate increase. The Fed has signaled that it will raise rates twice more this year, after having done so initially in March, and most economists foresee the next increase in June. Some Fed watchers have been cautioning that any lasting uptick in inflation or in economic growth might spur the Fed to pursue an additional rate increase before year's end.
"After running hotter this year, underlying inflation simmered down in April," said Sal Guatieri, senior economist at BMO Capital Markets. "This will take some pressure off the Fed from stepping up the pace of tightening, but it should not affect the already-high odds of a June rate hike."
Read Friday's Arkansas Democrat-Gazette for full details.