Consumer price index climbs 0.2% in April

The Labor Department reported its consumer price index rose 0.2 percent after slipping 0.1 percent in March.

Robert Frick, corporate economist with Navy Federal Credit Union, says the core CPI for April - which strips out food and energy costs - came in at an even lower 0.1 percent, good news for both consumers and investors.

Economists had forecast a 0.3 percent rise in the index.

Energy costs, which had fallen for two months, edged up 0.1 percent in April, although gasoline costs fell 0.4 percent. Economists had forecast a 0.2 percent gain in this "core CPI" measure.

The April number was below the consensus estimate of 0.3% and followed a decline of 0.1% in March.

While rising gasoline prices are pinching Americans' wallets, fuel is providing only a modest boost to the broad CPI, which rose 2.5% in April from a year earlier.

The food index was rose 0.3%.

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

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"This is a pretty soft print with a number of large declines", said Omair Sharif, a senior US economist at Societe Generale.

Royce Mendes, senior economist at CIBC World Markets said that he expects the latest inflation data to weigh on a surging US dollar, which should provide some near-term support for gold.

In April, the price of services ticked up 0.1 per cent.

April's small increase in the producer-price index was driven by rising prices for transportation and warehousing services that were partly offset by falling food prices. The Fed last week left its key interest rate unchanged while noting that inflation is nearing its optimal goal.

The cost of recreation fell 0.4 per cent last month, the biggest decline since December 2009.

Prices for processed goods for intermediate demand rose 4.7% in April from a year earlier. There were also decreases in the cost of airline tickets, new motor vehicles and communications.

Competition for workers is expected to push up wage growth, which has remained moderate. The dollar fell after the report suggested inflation isn't flaring up in a way that would be troublesome for policymakers, despite higher freight costs, a 17-year low in the unemployment rate and tariffs that are burdening businesses.

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