U.S. cost of living climbed the most in three years in April, indicating inflation may be picking up gradually as gasoline and rents rise.
Consumer price index which measures inflation rose 0.4 percent in April, following a 0.1 percent advance in March. This took the year-on-year increase in inflation to 1.1 percent from 0.9 percent recorded in March, a Labor Department report showed on Tuesday in Washington.
While core CPI, excluding food and energy costs rose 0.2 percent from a 0.1 percent gain in the previous month. Bringing its 12 months through April increase to 2.1 percent after gaining 2.2 percent in March.
The report also showed Americans paid more for food, medical care, tobacco, vehicle insurance, recreation, grooming and airfares in April.
“The combination of higher prices, housing gains and industrial production support the narrative of a second-quarter rebound in GDP, and will stir talks of the necessity of at least one Fed hike later this year,” said Jay Morelock, an economist at FTN Financial in New York
The current rise in prices in April is likely to be welcomed by Federal Reserve officials who last month said earlier declines in energy prices and falling prices of non-energy imports is the reason while they are below 2 percent inflation target.
With this 1.6 percent inflation report, the Fed is closer to its target than previously anticipated by economists.