Economic Watch: Consumer Prices Rise, Industrial Production Down
UPDATED -- A new report shows consumer prices rising for the sixth straight month, with the Consumer Price Index increasing 0.3% in April from the month before, the biggest gain in 10 months.
Evan Lockridge・Former Business Contributing Editor
May 15, 2014
3 min to read
UPDATED -- A new report shows consumer prices rising for the sixth straight month, with the Consumer Price Index increasing 0.3% in April from the month before, the biggest gain in 10 months.
The hike puts the inflation rate at 2% over the past 12 months, compared to one-year rate of 1.5% in March, and is the largest 12-month increase since July, according to the U.S. Labor Department.
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The iindices for gasoline, shelter, and food all rose in April and contributed to the seasonally adjusted all items increase. The gasoline index rose 2.3%, leading to the first increase in the energy index since January, despite declines in the electricity and fuel oil indexes. The food index rose 0.4% for the third month in a row, as the index for meats rose 2.9% in April, the biggest increase in more than 10 years.
The CPI for all items less food and energy rose 0.2% in April from March and 1.8% over the past year, with most of its major components posting increases, including shelter, medical care, airline fares, new vehicles, used cars and trucks, and recreation.
“As seen in yesterday's Producer Price Index report, there is evidence of minimal but positive price pressure in the pipeline. The recent rebound in spending in February and March has in part signaled to businesses that consumers could withstand at least a moderate rise in prices without the risk of losing market share,” said Lindsey Piegza, chief economist with the investment firm Sterne Agee. “That conclusion, however, appears to be short-lived as consumers have already pulled back from spending according to April's lackluster spending report.”
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Meantime, a separate report from the Federal Reserve shows industrial production in America fell 0.6% in April, following a 0.9% increase in March that was upwardly revised from an earlier report, and is the biggest decline in more than 18 months.
In April, manufacturing output fell 0.4% following substantial increases during February and March following a decrease in January, though severe weather had restrained production early in the quarter. The output of utilities dropped 5.3% as demand for heating returned toward normal levels. The production at mines increased 1.4% following a gain of 2% in March.
Total industrial production in April was 3.5% above its level of a year earlier. The capacity utilization rate for total industry decreased 0.7 of a percentage point in April to 78.6%, a rate that is 1.5 percentage points below its 1972 to 2013 average.
In his Twitter feed, Chris Williamson, chief economist at Markit Economics, noted that despite the monthly decline overall U.S. industrial production during the past three months is up 1.6%, which is the best three-month showing since September 2010 and is inline with expectations for continued future growth.
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