U.S. consumers paid more for gas and food in April, pushing inflation to its highest level in two and a half years. But so far this month, inflationary pressures have begun to ease. The Consumer Price Index increased 0.4% in April, the Labor Department says. In the past 12 months, prices have risen 3.2%. That’s the biggest 12-month gain since October 2008. Excluding volatile food and energy, prices ticked up 0.2% and have risen only 1.3% this year. That’s double the gain posted six months ago, but still below the level the Federal Reserve considers a healthy pace of inflation.
The cost of new and used cars, clothing and medical care all increased, pushing up the core index. Car prices likely increased because of temporary parts shortages caused by the March 11 earthquake and tsunami in Japan. Most other prices were subdued. Oil prices have fallen from their peak of $114 a barrel earlier this month to about $100 today. The prices of corn and other grains have also declined in recent days.
Economists say gas and food prices should retreat later this year. High prices are likely slowing the economy in the April-June quarter, but growth should pick up in the second half of this year, they say.
