Despite gas prices, inflation eases in April
WASHINGTON -- Consumer inflation moderated slightly in April, even though motorists were socked with another big jump in gasoline prices.
Outside of energy and food, inflation pressures remained well contained.
The Labor Department reported yesterday that consumer prices rose by 0.4 percent last month, following a 0.6 percent jump in March.
The April increase was slightly lower than Wall Street had been expecting, and investors were cheered because core inflation, which excludes volatile food and energy prices, 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.
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.
In other economic news yesterday, the National Association of Home Builders reported its builder confidence survey slipped to a reading of 30 in May, the lowest point in the current housing slump, as concern mounted over what rising mortgage foreclosures and tighter bank lending standards will do to demand.
"The crisis in the subprime market has infected other parts of the mortgage market, as well as consumer psychology, and as a result the housing outlook has deteriorated," said David Seiders, chief economist for the home builders.
RealtyTrac Inc., a research firm, said mortgage lenders foreclosed on 62 percent more homes in April than a year earlier and forecast the foreclosure rates will remain elevated for the rest of this year.
In a third housing report, the National Association of Realtors said 82 out of 145 metropolitan areas surveyed saw median home prices rise in the first three months of this year, compared to a year earlier, an improvement from the fourth quarter, when just 71 metropolitan areas reported year-over-year price gains.
The 0.4 percent increase in consumer prices was driven by a 4.7 percent jump in the cost of gasoline, which followed an even bigger advance in March of 10.6 percent.
The nationwide average price for gasoline has surged to a rec ord $3.087 a gallon, up 1.4 cents overnight, according to a survey by AAA and the Oil Price Information Service.
The big price spike has been blamed on unexpected refinery shutdowns that have crimped supplies.
Analysts warned that consumers can expect further increases this month.