US PPI for final demand increases 0.1 pct in April

US PPI for final demand increases 0.1 pct in April

It was the second month in a row with annual core inflation above 2.0%, the Federal Reserve's unofficial target for USA inflation.

The consumer price index rose 2.5 percent in April from 12 months earlier, the Labor Department said Thursday.

Food prices rose 0.3 percent last month, the largest increase in a year, after nudging up 0.1 percent in March.

US wholesale prices edged up just 0.1 percent in April, held down by a big drop in food costs.

U.S. consumer prices rose by less than forecast in April as costs for automobiles and airfares declined, reducing chances that inflation will run significantly above the Federal Reserve's target in coming months.

The pan-European FTSEurofirst 300 index of leading regional shares closed down 0.13 percent, but markets in London, Germany and France closed higher.

The Fed seeks to manage the economy to keep inflation rising at a moderate annual rate of 2 percent.

Cable TV prices fell 0.5 percent in April, the biggest drop in more than seven years, as more Americans opt for streaming video services instead.

For investors in U.S. Series I Savings Bonds, the April inflation number is the first in a six-month series that will reset the I Bond's inflation-adjusted variable rate on November 1, 2018. And expected increases in gasoline prices this summer will add to the inflation pressures. Crude oil prices jumped to 3-1/2-year highs on Wednesday following Trump's decision to exit the Iran deal.

American drivers paid more for gas, but overall consumer prices rose only modestly in April, a sign that inflation remains mild. Energy prices rose 7.9 percent higher on a year-on-year basis, largely reflecting rises in petroleum-related prices. Economists had projected a 0.4% gain when removing all three volatile categories. But those gains were partially offset by declines in electricity (down 0.6%), used cars and trucks (down 1.6%) and new vehicles (down 0.5%). Today's report continues a four-month trend of surging inflation, with the CPI-U index rising 1.62% over that period. Average weekly earnings, also taking into account inflation, fell 0.1% last month. Claims dropped to 209,000 during the week ended April 21, which was the lowest level since December 1969. That has led to a slowdown in job growth as employers struggle to find skilled workers. The jobless rate is within striking distance of the Fed's forecast of 3.8 per cent by the end of this year.

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