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EDITOR IN CHIEF- ABDULLAH BIN SALIM AL SHUEILI

US consumer prices rise slightly in April

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WASHINGTON: US consumer prices rose less than expected in April, suggesting that inflation was increasing at a moderate pace, which could allow the Federal Reserve to continue gradually raising interest rates.


But with the labour market tightening and oil prices rising after President Donald Trump on Tuesday pulled the United States out of an international nuclear deal, promising to restore stiff sanctions on Iran, price pressures are expected to accelerate in the coming months.


Inflation is flirting with the US central bank’s 2 per cent target. Policymakers have in recent days signalled they would not be too concerned if inflation overshot the target, reiterating what the Fed said in its statement last week. The Labor Department said its Consumer Price Index rose 0.2 per cent in April as increases in the cost of gasoline and rents were tempered by a drop in motor vehicle prices. The CPI had slipped 0.1 per cent in March.


“The sources of the weakness in last month’s reading do not suggest the onset of a trend shift lower,” said Michael Feroli, an economist at JPMorgan in New York. “Today’s number would not deter the Fed from hiking (interest rates) again next month.” In the 12 months through April, the CPI increased 2.5 per cent, the biggest gain since February 2017. That followed a 2.4 per cent rise in the year to March.


Excluding the volatile food and energy components, the CPI edged up 0.1 per cent after two successive monthly increases of 0.2 per cent. The so-called core CPI rose 2.1 per cent year-on-year in April, matching March’s increase.


The personal consumption expenditures price index excluding food and energy, which is the Fed’s preferred inflation measure, accelerated 1.9 per cent year-on-year in March, as last year’s big declines in the price of cell phone service plans dropped out of the calculation.


In another report on Thursday, the Labor Department’s first-time applications for state unemployment benefits were unchanged at a seasonally adjusted 211,000 for the week ended May 5. Claims dropped to 209,000 during the week ended April 21, which was the lowest level since December 1969.


The labour market is considered to be near or at full employment, with the unemployment rate close to a 17-1/2-year low of 3.9 per cent. That has led to a slowdown in job growth as employers struggle to find skilled workers. A government report on Tuesday showed job openings rising to a record 6.6 million in March. — Reuters


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