WASHINGTON – Consumer prices rebounded moderately in April as energy prices climbed back up after a sharp decline in March.
The Labor Department says consumer prices rose 0.2 percent after a 0.3 percent drop in March, which was the biggest fall in more than two years. Energy prices rose 1.1 percent after tumbling 3.2 percent the previous month.
Core inflation, which excludes the volatile food and energy categories, rose 0.1 percent. Over the past 12 months, inflation is up 2.2 percent. Core prices have risen 1.9 percent.
It's the first time the core inflation index has fallen below 2 percent since October of 2015.
"Given other recent economic indicators show accelerating economic growth and unemployment down to the lowest levels of the expansion, we expect that core inflation will reverse course soon and start moving upward again," said David Berson, chief economist at Nationwide Mutual Insurance.
However, Berson added that there was some risk that the weaker inflation of the past two months was signaling a slowing economy.
The Federal Reserve tries to manage the economy so that annual increases in inflation are around 2 percent. After mostly lagging below that target since the 2007-2009 recession, inflation has accelerated recently with the unemployment rate falling to 4.4 percent and energy prices rebounding.
The Fed cut its key interest rate to near zero in the wake of the recession and kept it there for seven years to boost the economy. It is now cautiously raising rates, with three-quarter point increases since December 2015. Analysts expect another hike in June.
Gas prices, which drove down the energy category last month, rose 1.2 percent after declining 6.2 percent in March and 3 percent in February.
Food prices rose 0.2 percent, driven by the fresh vegetable category, which rose 5.1 percent, its biggest increase since February 2011.
The cost of cellphone plans, which contributed to last month's overall decline, fell again along with medical care, apparel, new and used vehicles and auto insurance.
On Thursday, the Labor Department reported that inflation at the wholesale level rose 0.5 percent, and there was some concern among economists that the sharp increase might carry over to the consumer level. But those increases were moderate and suggest that retailers have not yet passed on those costs to consumers.