USA consumer prices rise slightly; labor market tightening

Lukewarm inflation data lifts Wall St

Lukewarm inflation data lifts Wall St

Yet the yearly increase in the core rate was unchanged at 2.1%, a softer than expected reading that's likely to give comfort to a Federal Reserve on inflation watch. In April, a 0.3-percent rise in the index for final demand goods less foods and energy and a 0.1- percent advance in prices for final demand energy offset a 1.1-percent drop in the index for final demand foods.

Excluding the volatile food and energy components, the CPI edged up 0.1 percent after two successive monthly increases of 0.2 percent.

In the 12 months through April, the core PPI rose 2.5 per cent after jumping 2.9 per cent in March. Other gauges broadly show stronger inflation in the U.S. The Commerce Department said last week its price index for personal-consumption expenditures was up 2% from a year earlier in March.

The pan-European FTSEurofirst 300 index of leading regional shares fell 0.25 percent, but shares in London, Germany and France were higher.

For investors in U.S. Series I Savings Bonds, the April inflation number is the first in a six-month series that will reset the I Bond's inflation-adjusted variable rate on November 1, 2018.

Chinese internet giant Tencent, Apple, Microsoft and Facebook led the index's advance, while the US technology sector lifted Wall Street.

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The U.S. data showed costs for big-ticket items such as automobiles and airfares declined last month, reducing chances that inflation will run significantly above the Fed's target. Prices for both food at home grew 0.3%, while food away from home rose 0.2%. Owners-equivalent rent, one of the categories created to track rental prices, advanced 0.3%. The New Zealand dollar slid after the central bank left the door open to an interest rate cut as inflation remains contained. Transportation and warehousing costs were up 0.6% on the month. The index rose 2.1% for the 12 months ending in April. That has led to a slowdown in job growth as employers struggle to find skilled workers.

Petrol prices rebounded 3% in April after tumbling 4.9% in March. There were also decreases in the cost of airline tickets, new motor vehicles and communications.

Competition for workers is expected to push up wage increases, which have remained moderate.

Hiring slowed in March and April after surging in February.

The labor market is considered to be near or at full employment, with the unemployment rate close to a 17-1/2-year low of 3.9 percent.

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