US Consumer Price Hike Fuels Inflation Fears

19 May 2006

The US economy is facing inflationary pressures following April's rise in consumer prices.

The nation's average retail prices of goods and services climbed a seasonally adjusted 0.6% last month, up from 0.4% in March, and rising at a 3.5% annual rate, according to the Labor Department. The monthly increase was led by a 3.9% jump in energy prices.

Economists, however, are more concerned by steeper-than-expected gains in the prices of services, such as rent, pushing up 'core' consumer prices.

Core prices in April were up 2.3% from a year earlier - near the top end of the Federal Reserve's 'comfort zone' - exceeding March's increase of 2.1%.

A sustained trend would make it difficult for new Fed chairman Ben Bernanke to establish inflation-fighting credentials without stifling economic expansion.

Data sourced from Wall Street Journal Online; additional content by WARC staff