US prices are up, way up, for the third month. The news has just arrived via a statement from the US Labor Department on Friday. The numbers show the stabilization of inflation in the country.
As the consumer-price index (CPI) shows, it is up 0.1% for April as compared to the month before. The index records what US residents pay for everything from health care to bread. The core prices, which exclude the wavering energy and food categories, were up 0.3%, which is the biggest jump since January 2013. This number is higher than The Wall Street Journal had predicted; they had estimated a rise, yes, but only to 0.2% for the core prices.
However, as compared to 2014, the consumer-price index numbers have actually dropped. They dropped 1.8% for core prices and 0.2% overall. The CPI numbers are important to the Federal Reserve, who had been tracking interest rates to determine when to increase the said rates, which have been at near zero for almost three years. They are trying to gauge when to increase the rate, based on what the numbers say about inflation.
The Feds have said that expect the US economy to improve slowly in the long term. Inflation is strengthening, which could be a push in the direction for the Feds to bump up the interest rate. They cannot put it off forever and a top US economist for Capital Economics, Paul Ashworth, has said that September is likely when the rate hike will occur. He also states that it may be July, particularly if rises in core prices of the CPI continue to rise in the coming months.
The strengthening of the consumer-price index was first noted in the middle of 2014. A firmer economy will likely be what the Federal Reserve needs to see before they make their initial move to raise rates. As for why core prices increased for the third straight month in April, it is in response to higher prices for cars, medical care, and housing.