U.S. consumer prices rose in April but underlying inflation remained muted, suggesting the Federal Reserve could keep interest rates unchanged for a while.
The Labor Department said on Friday its Consumer Price Index increased 0.3% last month, lifted by rising gasoline, rents, and health-care costs. The CPI gained 0.4% in March.
In the 12 months through April, the CPI increased 2.0% after advancing 1.9% in March. Economists polled by Reuters had forecast the CPI increasing 0.4% in April and advancing percent 2.1% year-on-year.
Excluding the volatile food and energy components, the CPI edged up 0.1% as apparel prices dropped for a second straight month. The so-called core CPI has increased by the same margin for three straight months.
In the 12 months through April, the core CPI increased 2.1% after gaining 2.0% in March.
The Fed last week kept interest rates unchanged and signaled little desire to adjust monetary policy anytime soon. Fed Chairman Jerome Powell said he believed the recent weak inflation readings "may wind up being transient."
The U.S. central bank, which has a 2% inflation target, tracks a different measure, the core personal consumption expenditures (PCE) price index, for monetary policy.
The core PCE price index increased 1.6% on a year-on-year basis in March, the smallest rise in 14 months, after advancing 1.7% in February. The April PCE price index data will be published later this month.
In April, gasoline prices rose 5.7%, accounting for more than two-thirds of the increase in the CPI last month, after surging 6.5% in March.
Food prices dipped 0.1% in April after gaining 0.3% in the prior month. Food consumed at home dropped 0.5%. But consumers paid more for rent. Owners' equivalent rent of primary residence, which is what a homeowner would pay to rent or receive from renting a home, increased 0.3% last month after rising by the same margin in March.
Health-care costs increased 0.3%, matching March's gain. Apparel prices declined 0.8% last month. They plunged 1.9% in March, which was the biggest drop since January 1949, after the government introduced a new method and data to calculate apparel prices.
Prices for used motor vehicles and trucks fell 1.3%, decreasing for a third straight month. There were decreases in the cost of airline fares, household furnishings and tobacco. The cost of new vehicles ticked up 0.1% after rising 0.4% in March.