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Numbers: Rising rents and higher gas prices in April led to a sharp rise in inflation for the second month in a row, but price pressures no longer seemed to be a threat to the US economy.
The consumer price index rose 0.3% in April, the government said on Friday. Economists surveyed by MarketWatch had forecast a 0.4% advance.
The increase in the cost of living over the last 12 months has increased slightly from 1.9% to 2%. This is the highest inflation rate since November, but well below the 2.9% peak recorded last year.
Another measure of monitored inflation, which excludes food and energy, rose 0.1% for the third month in a row.
The annual increase in the so-called base rate went from 2% to 2.1%.
What happened: Gas prices rose 5.7% seasonally adjusted last month, accounting for two-thirds of the rise in the overall consumer price index. Rents increased 0.4% and medical care costs 0.3%.
The increase in these costs was partially offset by a slight decline in food prices – the first decline since the summer of 2017. The cost of all major categories of grocery stores has declined, to Exception of dairy products. Used vehicles were also cheaper.
The cost of clothing fell 0.9%, a second significant decline in a row. The government has changed the way it calculates the cost of clothing, and economists believe that the latest numbers should be treated with caution until more data is collected.
The decline in clothing prices and several other key consumer goods and services appears to make the basic CPI slightly lower than it may in fact – what the President of the Federal Reserve, Jerome Powell, called a "transitional" factor that may soon disappear.
Related: IPP report provides some support for Powell's "transitory" explanation of inflation
In other words, the Fed expects inflation to remain close to its target of 2%. The central bank relies on another price indicator, called the PCE index, as the main tool for monitoring inflation.
After adjusting for inflation, hourly wages fell by 0.1% last month. They increased slightly by 1.2% over the last year.
Big picture: Inflation declined gradually towards the end of 2018 and still seems well under control, despite soaring gasoline prices at the beginning of the year and the most tense labor market since half a year. century.
Some on Wall Street believe that inflation may fall again this year and force the Fed to lower interest rates, but senior central bankers and most economists insist that the price is temporary. They expect a slight rise in inflation in the coming months.
Lily: The stars are aligned for the economy as it gets closer to the longest expansion
Market reaction: The Dow Jones Industrial Average
DJIA, -0.54%
and S & P 500
SPX, -0.30%
had to open lower in the trades of Friday. Inventories fell this week due to doubts about the ability of the United States and China to resolve a tense conflict over trade rules for imports and exports. The United States raised its tariffs at midnight while negotiations continued.
Lily: The trade struggle with China has not yet touched most Americans. Here is what could change that
The 10-year Treasury yield
TMUBMUSD10Y, + 0.15%
was unchanged at 2.46%. Many loans, such as mortgages and auto loans, are tied to the 10-year note changes, which have fallen from the record level of the past seven years (3.23% in October).
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