Consumer Price Data Helps To Ease Inflation Concerns

(RTTNews) - Concerns about the pace of inflation have continued to ease on Tuesday following the release of the Department of Labor's report on consumer prices in the month of April. The report showed that prices rose a little less than economist had expected
The Labor Department said its consumer price index rose 0.4 percent in April following a 0.6 percent increase in March. The increase came in slightly below economist estimates of a 0.5 percent increase.
A significant increase in energy prices contributed to the increase in consumer prices, with energy prices rising 2.4 percent in April after surging up 5.9 percent in March. The rise in energy prices also contributed to a 1.2 percent increase in transportation costs.
The continued increase in energy prices was partly due to a notable increase in gasoline prices, which rose 4.7 percent in April following a 10.6 percent increase in the previous month.
The report also showed that the core consumer price index, which excludes food and energy prices, edged up 0.2 percent in April after rising 0.1 percent in March. Economists had expected a 0.2 percent increase.
The release of the consumer price data comes on the heels of last week's report on April producer prices, which showed a slightly bigger than expected 0.7 percent increase in prices. However, the report also showed that core producer prices were unchanged for the second consecutive month.
The relatively tame inflation data has helped to ease some of the recent concerns about the pace of inflation and generated some optimism that the Federal Reserve might consider lowering interest rates in the near future.
While the Federal Reserve has acknowledged a slowdown in the pace of economic growth, it has said that inflation failing to moderate as expected remains its predominant policy concern. The Fed will make its next interest rate decision after a meeting in late June.
In other economic news, the Federal Reserve Bank of New York released its report on business activity in the New York manufacturing sector in the month of May on Tuesday, showing that the pace of growth in the sector accelerated slightly less than expected.
The report showed that the New York Fed's general business conditions index rose to 8.03 in May from 3.80 in April, with a positive reading indicating growth in the sector. Economists had expected the index to rise to 9.0.
The accelerated pace of growth in the sector was partly due to faster new orders and shipment growth. The new orders index rose to 8.02 in May from 3.94 in April, while the shipments index rose to 14.13 from 8.66.
There was also some improvement in employment, with the number of employees index rising to 9.67 in May from 5.42 in the previous month.
At the same time, the report showed a mixed inflation picture, as the prices paid index fell to 34.44 in May from 40.48 in April, while the prices received index rose to 15.56 from 7.14.
The New York Federal Reserve also said that there was some improvement in the outlook for the next six months, with the future general business conditions index rising to 49.79 in May from 33.85 in the previous month.