Gasoline Costs Push Consumer Price Index Higher In April

A nearly 10 percent monthly jump in gasoline costs drove the consumer price index 0.4 percent higher in April but outside of this, pressure is not building. The core rate did rise a respectable 0.2 percent but the year-on-year rate, which is a closely followed gauge for overall inflation, went 1 tenth in reverse for a second straight month to only plus 2.1 percent and barely above the Fed's 2 percent policy line.
Apparel prices, which continue to decline despite the recent easing in the dollar, have been a major factor all year behind the lack of pressure. Service prices continue to show the most heat, led by medical care at plus 0.3 percent in the month and plus 3.0 percent on the year, but housing prices have been flat, up 0.2 percent in the month and 2.1 percent on the year. The backdrop for the inflation picture is wages, where limited gains are not pressuring selling prices. The headline aside, this report will not revive whatever chances there are for a June FOMC rate hike.

Recent History Of This Indicator:
The Econoday consensus is calling for a snapback for consumer prices, at a consensus plus 0.3 percent overall and plus 0.2 percent for the core rate. The overall rate looks to get a boost from gas prices while the core may get a boost from both shelter prices, which have been flattening out this year, and also from service prices which slowed sharply in March. The year-on-year rate for the core, at only plus 2.2 percent in the last report, fell 1 tenth and a gain in April would help build confidence that Federal Reserve efforts to stimulate inflation may finally be showing some traction. General gains in this report would also hint at the possible effects of wage inflation where signs of strength in other reports, though limited, have been emerging.