Rising gasoline prices drove up U.S. consumer inflation in April to the highest level in more than two years, official data showed Friday.
On a 12-month basis, the Labor Department's consumer price index was up 3.2% in April, the highest figure since October 2008 when the global financial crisis was accelerating following the Lehman Brothers bankruptcy.
The CPI growth rate slowed slightly on a month-to-month basis, to a seasonally adjusted 0.4% in April from a 0.5% rise in March.
It was the 10th consecutive month of increases in CPI, and in line with the average expert forecast.
"Today's report provides further evidence of gradually increasing prices across a broad range of goods and services, consistent with our view that the degree of economic slack is not that large," said Peter Newland at Barclays Capital Research.
"The deflation threat is gone," said Ian Shepherdson, chief U.S. economist at High Frequency Economics.
Gasoline prices accounted for almost half of the monthly increase, the Labor Department said. Its gasoline index increased 3.3% from March and was up 33.1% from a year ago.
Food prices continued to rise in April but at the smallest increase of the year -- 0.5% -- and were up 3.2% from a year ago.
Core CPI, excluding food and energy prices, was double the consensus April estimate, at 0.2%.
It was the third increase of that size in the last four months, the department noted. Core inflation is up 1.3% rate compared with April 2010, the sixth straight month of annual gains.
Driving core inflation higher were price increases for new vehicles, used cars and trucks, medical care, and shelter, the department said.
The Federal Reserve has said it views higher energy and food prices as temporary and will keep near-zero interest rates for some time to support a fragile economic recovery from recession.
"Higher food and energy prices are in part -- and perhaps in large measure -- a result of the Feds ultra-easy monetary policy, and core inflation and headline inflation will head significantly higher in 2011," RDQ Economics analysts John Ryding and Conrad DeQuadros warned in a client note.
"We see higher inflation at the consumer level as hurting the consumer because the goods that are rising fastest in price are goods with low price elasticity -- so consumers cannot easily substitute away from them and, as a result, suffer a real income hit."
Government figures released Thursday showed that higher gasoline and food prices took a greater chunk from Americans' pocketbooks in April as the growth of overall U.S. consumer spending slowed in the month.
Copyright Agence France-Presse, 2011
