Gasoline and rents pushed US consumer prices higher in April, their fastest rate in three years, paving the way for another interest rate hike from the US Federal Reserve Bank.
The Labor Department on Tuesday reported its Consumer Price Index jumped 0.4% last month, the largest gain since February 2013. The index rose 0.1% in March. Year over year, the CPI is now up 1.1% vs. 0.9% in March.
The new numbers beat the 0.3% consensus forecast of economists polled by Reuters, but matched the year-over-year forecast of 1.1%
The so-called core CPI, which strips out food and energy costs, rose 0.2% after inching up 0.1% in March. For the 12 months through April, the core CPI has increased 2.1%, down from a 2.2% increase in March.
Prices also rose for medical care, food, recreation, tobacco, motor vehicle insurance, airline fares and grooming.
The uptick in inflation is expected to be well received by the Fed, which said last month inflation was running below target due to “declines in energy prices and falling prices of non-energy imports.” Fed policy makers had predicted two interest rate hikes for this year, but the soft inflation numbers has led the investors to consider an increase before September unlikely. Tuesday’s numbers denote a trend that the Fed could use to boost rates earlier.