WASHINGTON - Consumer inflation moderated slightly in April even though motorists were socked with another big increase in gasoline prices. Besides energy and food, inflation pressures remained well-contained.
The Labor Department reported yesterday that consumer prices rose 0.4 percent last month after a 0.6 percent jump in March.
The April increase was slightly lower than Wall Street had been expecting. Investors were cheered because core inflation, which excludes volatile food and energy, edged up a slight 0.2 percent, the third month at this level or less after a worrisome 0.3 percent rise in January.
"The key aspect of this report is that the core inflation rate continues to moderate," said Joel Naroff, chief economist at Naroff Economic Advisors, of Holland, Pa.
Wall Street investors agreed, believing the better-than-expected reading on inflation would hasten the day when the Federal Reserve might start cutting interest rates to deal with an economy that has been battered by a significant slump in housing.
The 0.4 percent increase in consumer prices was driven by a 4.7 percent rise in the cost of gasoline, which followed an even bigger 10.6 percent advance in March.
The nationwide average price for gasoline has surged to a record $3.07 per gallon, according to the latest Lundberg Survey, surpassing the old mark of $3.03 per gallon set in August.
The big price spike has been attributed to unexpected refinery shutdowns that have crimped supplies. Analysts warned that consumers could expect additional increases this month.
Through the first four months of this year, consumer inflation is rising at an annual rate of 4.8 percent, almost double the 2.5 percent increase for all of 2006. The acceleration has occurred in large part because of higher costs for food and energy.
However, excluding energy and food, core inflation is up at an annual rate of just 2.2 percent through April, an improvement from the 2.6 percent rise in core prices for all of 2006.
For April, food costs rose 0.4 percent. Big increases for beef, poultry and vegetables offset declines in the price of pork and fruits.
The prices of clothing, airline tickets and tobacco products all showed declines in April.
The faster pace of inflation so far this year is being felt in workers' paychecks. The Labor Department said average weekly earnings for nonsupervisory workers fell 0.5 percent in April, compared with March, after adjusting for inflation.
Inflation-adjusted wages were up 0.9 percent in April compared with 12 months ago, the smallest year-over-year gain in eight months.