U.S. consumer prices increased modestly in April, lifted by higher gasoline costs, the government reported Thursday, signaling that broader inflation pressures remain tame. The Labor Department said its consumer price index (CPI) rose 0.2 percent last month as higher costs for gasoline and rental accommodations were partially offset by a slowing of healthcare price gains. The CPI fell 0.1 percent in March. In the 12 months through April, the CPI increased 2.5 percent, the biggest gain in 14 months. Inflation has increased steadily since last summer, when it rose just 1.6 percent in June from a year earlier. Last month, gasoline prices rebounded 3 percent after dropping 4.9 percent in March. Further increases are likely after crude-oil prices jumped to more than three-year highs Wednesday following President Donald Trump's decision a day earlier to withdraw the United States from a multilateral nuclear pact with Iran. Food prices rose 0.3 percent in April, the biggest increase in a year, after advancing 0.1 percent in March. Rental-accommodation costs increased 0.3 percent last month. Excluding volatile energy and food costs, core CPI rose only 0.1 percent in April and 2.1 percent from a year earlier. Slower growth in core prices than the overall CPI may mean the Federal Reserve (Fed) will be less likely to accelerate interest-rate increases. The U.S. central bank has signaled it will lift rates twice more this year, but some observers expect that higher inflation or economic growth might prompt the Fed to add a third rate increase. The Fed's preferred inflation gauge that is tied to the consumer-prices report—personal consumption expenditures (PCE) price index excluding food and energy—accelerated 1.9 percent in the 12 months through March, nearing the central bank's 2-percent target. Inflation fears on Wall Street have intensified in recent months with the unemployment rate sinking to a more than 17-year low of 3.9 percent and continued strong hiring expected to eventually lift wages, which would cause businesses to increase prices to offset their own rising costs.
