Fears of an inflationary spiral in the U.S. eased somewhat May 18 after a report showing "core" prices, excluding food and energy, were flat in April. Consumer prices rose 0.5% in April, but the core rate, excluding the volatile food and energy components, was unchanged the Labor Department said.
The month-on-month rise in the consumer price index (CPI) was just over the 0.4% expected on Wall Street. It was mostly due to higher oil prices, the Labor Department said. The less volatile core rate was predicted to rise 0.2%.
Analysts said the report should allay concerns about inflation spiralling out of control, which could prompt more aggressive moves by the U.S. Federal Reserve. Merrill Lynch economist Sheryl King said the report "will go a long way towards reducing the concerns about building inflation pressures." Looking forward, King added, "The details of the report imply that some of the factors that were boosting core inflation in recent months are now pulling back." She said the data showed some firms were forced to pull back prices increases after consumers balked.
Copyright Agence France-Presse, 2005