Due to weak gasoline prices, US consumer prices moderated in April, while rising shelter and medical care costs supported underlying inflation pressures. According to the Labour Department the consumer price index (CPI) rose 0.1 percent in April, after increasing 0.2 percent in March.
In the 12 months through April, the CPI fell 0.2 percent, marking the largest decline since October 2009. On annual basis the CPI rose 1.8 percent after a similar growth in March. However, the core CPI, which excludes food and energy costs increased 0.3 percent, the largest gain since January 2013, after increasing 0.2 percent in March.
In April gasoline prices fell 1.7 percent after increasing 3.9 percent in March. Food prices were unchanged after falling 0.2 percent in March.
The upward trend in core inflation is expected to keep the US Federal Reserve on track to hike interest rates for first time since 2006. Earlier this week the Fed released its Federal Open Market Committee meeting minutes and ruled out a hike in June. Based on a recent set of weak data, some analysts have been in doubt that the Fed will skip September to hike the rates. The central bank has a 2 percent inflation target and has kept its interest rates near zero since December 2008.
Although markets follow the CPI data very closely, all eyes are on Fed Chair Janet Yellen’s speech, which is to take place on Friday evening. Yellen is expected to talk about the economy’s prospects, while acknowledging the recent slowdown. But she is also expected to reiterate economy’s steady job growth, keeping the Fed on track for its rate hike to happen later this year.