WASHINGTON – Surging food and energy costs pushed U.S. consumer prices up a hefty 0.5 percent in April, but outside those volatile areas prices were unexpectedly tame, holding steady for the first time in 1½ years, a government report showed on Wednesday.
The rise in the Labor Department's (search) consumer price index (search) was slightly ahead of expectations on Wall Street for a 0.4 percent gain, but analysts had expected prices excluding food and energy to rise 0.2 percent.
The report was likely to provide comfort to financial markets, which had become worried over the potential for a broad inflation (search) surge amid high energy costs.
The department said the flat core inflation reading — the first since November 2003 — reflected big drops in apparel and lodging costs, both of which had risen sharply in March.
Energy prices advanced swiftly for the third consecutive month, rising 4.5 percent, and food costs shot up 0.7 percent. Over the past 12 months, consumer prices have risen 3.5 percent, largely reflecting an oil price surge that has begun to abate.
Core consumer prices are up a milder 2.2 percent over the past year, marking the second straight month that inflation gauge has moved lower.
Apparel costs, which rose 0.8 percent in March, fell 0.6 percent in April. Lodging costs, which include hotels and college dormitories, fell 1.2 percent after a March gain of 3.9 percent.
The Federal Reserve (search) has moved overnight interest rates up to 3 percent from 1 percent last June in an effort to keep price pressures under wraps as the economy gained steam. A moderation in inflation pressures could allow the Fed to continue to move rates up at a gradual pace.