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US consumer prices flat in April
AFP - Saturday, May 16
WASHINGTON (AFP) - - US consumer prices held flat in April, in line with analyst expectations, but fell on an annual basis at the steepest pace in nearly 54 years, government data showed Friday.
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On a seasonally adjusted basis, the consumer price index (CPI), a measure of the average price of consumer goods and services purchased by households, was unchanged in April, after slipping 0.1 percent in March, according to Labor Department data.
On a 12-month basis, CPI fell for the second month in a row, by 0.7 percent, the sharpest decline since June 1955.
In April 2008, inflation had been driven higher by surging commoditiy prices, particularly oil.
The global financial and economic crisis that accelerated last September put the brakes on price gains as consumers retrenched in the face of rising unemployment, tight credit and shrinking investments.
Excluding energy and food, consumer prices rose more than expected, by 0.3 percent in April from March, boosted by a sharp increase in federal tobacco taxes on April 1.
The analyst consensus forecast for core inflation was a weak 0.1 percent.
Annual core CPI stood at 1.9 percent, close to the inflation rate the Federal Reserve considers desirable for the world's largest economy.
Weak energy prices once again dampened inflation. The energy index fell for the second consecutive month, by 2.4 percent, after a 3.0 percent drop in March.
On an annual basis, energy prices plummeted 25.2 percent.
Food prices fell for the third straight month, by 0.2 percent in April after 0.1 percent in the prior month.
Food prices were up 3.3 percent from April 2008.
A major factor offsetting a a decline in overall inflation was a 9.3 percent rise in tobacco prices under the new federal tax, the Labor Department said.
Ian Shepherdson at High Frequency Economics pointed out that the 9.3 percent jump in tobacco prices, following an 11.0 percent leap in March, skewed the reading on inflation.
The tobacco price increases "can't continue, so a better guide to the underlying picture comes from the core (CPI) ex-tobacco, which rose 0.16 percent in April and 0.06 percent in March," he said.
He said his firm's remains unchanged "that the pressure on core CPI is downwards and will remain so for the foreseeable future, though the markets likely will disagree for now."
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