WASHINGTON – Consumer prices jumped by 0.5 percent in April, the largest increase in almost a year, led by sharply higher costs for gasoline, airfares and hospital services.
The advance in the Consumer Price Index, a closely watched inflation gauge, followed a 0.3 percent increase in March, the Labor Department reported Wednesday.
Excluding volatile energy and food prices, the "core" rate of inflation rose 0.3 percent in April. That followed a 0.1 percent rise in March.
The latest reading on inflation was a bit worse than many analysts were expecting. They were forecasting a 0.4 percent rise in overall prices and a 0.2 percent advance in the core rate.
With the economy on the rebound from last year's recession, analysts generally aren't expecting inflation to become a problem.
To cope with the slump, many companies heavily discounted merchandise to bolster sales. After seeing their profits take a hit, companies are itching to raise prices but probably will be restrained by competition and cheaper-priced imported goods flowing into the United States, analysts say.
In another report, businesses reduced their stocks of unsold goods in March for the 14th straight month, the Commerce Department said. Business inventories fell 0.3 percent and sales rose by the same amount. As stockpiles are depleted, factories will have to boost production to meet demand, which bodes well for economic growth.
Citing uncertainties about the vitality of the recovery, the Federal Reserve last week left short-term interest rates unchanged at 40-year lows. Fed Chairman Alan Greenspan has said that a long period of low inflation means policy-makers have the luxury of waiting to see how the recovery unfolds before boosting rates.
But in April, energy prices, which have pushed higher on tensions in the Middle East, rose 4.5 percent, on top of a 3.8 percent increase the previous month.
Gasoline prices shot up 10.1 percent, the largest jump since June 2000. Fuel oil prices went up 3.5 percent and natural gas prices rose 2.4 percent.
Global output for crude oil shrank by almost 2 percent after Iraq suspended crude exports in April, raising the prospects of higher oil prices as the world economy pulls out of a slump.
Still, analysts say, inventories of gasoline are plentiful in the United States, so motorists might not feel much of a sting at the pump as they head into the busy summer driving season.
The average price of regular gasoline last week was $1.40 a gallon, 31 cents cheaper than at the same time a year ago, according to the Energy Information Administration.
Air fares rose 0.9 percent in April. Charges for hospital and related services rose 1.1 percent, the biggest increase since November 1990. Prices for tobacco products shot up 6.5 percent, the largest gain since September 1999.
There was some good news for shoppers. Food prices edged up just 0.1 percent in April, following a 0.2 percent increase. Prices last month fell for vegetables, fruits, poultry, pork and diary products.
Clothing prices declined 0.6 percent as merchants discounted spring and summer merchandise.
The 0.5 percent in overall consumer prices was the biggest rise since May 2001, when prices also rose by that amount.
During the first four months of this year, consumer prices rose at a seasonally adjusted annual rate of 3.8 percent. That compares with a 1.6 percent rise for all of 2001. The pickup largely reflects rising energy costs. So far this year, energy prices rose at a rate of 28 percent, compared with a 13 percent drop in 2001.