Energy Consumer Inflation Up 0.6 Percent in USA Cities

Commodity and service prices paid by urban consumers in the USA rose 0.4 percent in April when seasonally adjusted, with energy inflation climbing 0.6 percent, the labor department said Wednesday.

The further increase in the overall adjusted Consumer Price Index for All Urban Consumers (CPI-U) after a 0.1 percent rise in March comes despite continual tightening of monetary policy to hold down prices.

A three percent surge in gasoline prices as measured by seasonally-adjusted CPI-U drove a rebound in energy costs. Adjusted energy commodities and utility CPI-U had fallen by a further 3.5 percent in March after sliding 0.6 percent February.

The CPI-U for energy commodities with adjustments for seasonal factors climbed 2.7 percent in April after dipping 4.6 percent the prior month, though fuel oil dropped 4.5 percent.

But adjusted energy services CPI-U further declined 1.7 percent after decreasing 2.3 percent in March. Electricity bills decelerated 0.7 percent while the cost of piped gas service slowed down 4.9 percent.

“The increase in the gasoline index more than offset declines in other energy component indexes…“, the department’s statistics bureau said in a press release.

Housing drove the increase in overall CPI-U inching up 0.4 percent after rising 0.6 percent in March.

“The index for shelter was the largest contributor to the monthly all items increase, followed by increases in the index for used cars and trucks and the index for gasoline”, the bureau said.

It added: “The food index was unchanged in April, as it was in March. The index for food at home fell 0.2 percent over the month while the index for food away from home rose 0.4 percent”.

The nudge-up in inflation comes despite the USA central bank having raised interest rates for the ninth consecutive month to 4.75 to five percent effective March 23.

Notwithstanding the Federal Reserve’s consistent hikes to slow down money circulation to rein in inflation, the all-items unadjusted index for the 12 months up to April was 4.9 percent higher, though this is the slimmest one-year increase since the 12 months to April 2021, according to the labor statistics office.

“The energy index decreased 5.1 percent for the 12 months ending April, and the food index increased 7.7 percent over the last year”, it said.

The Fed this month again raised its overnight policy rates, or interest percentages by which financial institutions lend or borrow excess reserves to or from each other.

“The [Federal Open Market] Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run”, the central bank said in a press statement May 3. “In support of these goals, the Committee decided to raise the target range for the federal funds rate to 5 to 5-1/4 percent”.

“In determining the extent to which additional policy firming may be appropriate to return inflation to 2 percent over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments”, the Fed added.

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