U.S. consumer prices surge in April amid concerns over inflationary pressures

WASHINGTON, May 12 (Xinhua) -- U.S. consumer prices rose 0.8 percent in April, with a 12-month increase of 4.2 percent, the U.S. Labor Department reported Wednesday.

This marked the largest 12-month growth since a 4.9-percent increase for the period ending September 2008, according to the report.

This followed a revised 0.6 percent growth in March, with the 12-month all items index rising 2.6 percent, the report showed.

The 0.8-percent "surge" in consumer prices in April was the "latest sign of supply not being able to meet the onslaught of demand as the economy reopens," Sarah House and Shannon Seery, economists at Wells Fargo Securities, wrote in an analysis.

In April, the month-on-month growth in consumer price index (CPI) was partially driven by the 10-percent surge for the index of used cars and trucks, which accounted for over one third of the all items increase, the Labor Department report showed.

Used vehicle prices, food prices, hotel room rates, shared rides, recreation costs and household furnishing prices "all contributed to the gains," Diane Swonk, chief economist at Grant Thornton, a major accounting firm, and her colleague Yelena Maleyev said in a blog.

The food index was up by 0.4 percent in April. The energy index, meanwhile, decreased slightly by 0.1 percent, as a decline in the index for gasoline more than offset increases in the indexes for electricity and natural gas, according to the Labor Department.

Swonk and Maleyev noted that losses in energy prices would be "temporary" given the spike associated with the shutdown of the Colonial Pipeline following a cyber attack, adding that prices at the gas pump were up nearly 50 percent from a year ago.

Excluding the volatile food and energy categories, the so-called core CPI rose 0.9 percent in April, marking the largest monthly increase since April 1982, the latest official data showed.

The energy index, in particular, soared 25.1 percent over the last 12 months ending April, and the food index increased 2.4 percent.

The index for all items excluding food and energy rose 3 percent over the last 12 months, a much larger increase than the 1.6-percent rise over the 12-month period ending in March.

For months, the annual core CPI had been held below 2 percent, the central bank's inflation target.

"A good portion of the year-over-year increase in inflation measures can be attributed to a downdraft in many prices when lockdowns took effect a year ago," Swonk and Maleyev said.

"Another portion is due to supply chain problems and shortages that are emerging in the goods sector," Swonk and Maleyev said, adding that a ramping up of vaccinations, an easing of restrictions and stimulus checks are beginning to unleash pent-up demand for services.

"Inflation is picking up," they said. "The economy is going to get a lot hotter."

Federal Reserve Vice Chairman Richard Clarida said on Wednesday that the U.S. economy remains a "long way" from the central bank's inflation and employment goals, pledging to keep the ultra-loose monetary policy in place.

In remarks to the National Association for Business Economics International Symposium, Clarida also played down inflation risks, arguing that the rise in inflation was likely to be proven largely transitory.

"Readings on inflation on a year-over-year basis have recently increased and are likely to rise somewhat further before moderating later this year," he said, expecting inflation to return to, or perhaps run somewhat above, 2 percent in 2022 and 2023.