Rising Food and Gas Costs Push Consumer Price Index Higher

By CHRISTOPHER S. RUGABER, AP Economics Writer

WASHINGTON -- Consumers paid more for gas and food in April, pushing inflation to its highest level in two and a half years. But so far this month, inflationary pressures have begun to ease.

The Consumer Price Index increased 0.4% in April, the Labor Department said. In the past 12 months, prices have risen 3.2%. That's the biggest 12-month gain since October 2008.

Excluding volatile food and energy, prices ticked up 0.2% and have risen only 1.3% this year. That's double the gain posted six months ago, but still below the level the Federal Reserve considers a healthy pace of inflation.

The cost of new and used cars, clothing, and medical care all increased, pushing up the core index. Car prices likely increased because of temporary parts shortages caused by the March 11 earthquake and tsunami in Japan. Most other prices were subdued.

Oil prices have fallen from their peak of $114 a barrel earlier this month to about $100 Friday. The prices of corn and other grains have also declined in recent days.

Economists say gas and food prices should retreat later this year. High prices are likely slowing the economy in the second quarter, but growth should pick up in the second half of this year, they say.

"With commodity prices now dropping back, it looks like inflation is close to peaking," said Paul Ashworth, chief U.S. economist for Capital Economics, who expects year-over-year inflation should climb to 3.5% before dropping in the second half of the year.

Cary Leahey, an economist at Decision Economics, said yearly inflation figures should start to decline in the next several months, although core prices should continue to rise. The Federal Reserve won't need to start raising interest rates until next year to keep inflation in check, he said.

Gas prices rose 3.3% in April. That accounts for half last month's increase. They have soared more than 33% in the past year. Demand in fast-growing developing countries and political turmoil in the Middle East have caused oil prices to rise. Prices at the pump have since leveled off near $4, up $1.09 from last year.

Food prices increased 0.4% last month. That's half the previous month's increase, which was the largest in nearly three years. The price of fresh vegetables fell. Dairy, meat, fish and eggs all rose.

Federal Reserve Chairman Ben Bernanke has said that the impact of higher food and gas prices should be temporary. The central bank has also said it is watching closely for any signs of inflation. Seven months ago, when the core index had risen only 0.6 percent in a year, the Fed was more concerned about falling prices. The October reading was the smallest increase since the index began in 1957.


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rosecabinets

Not sure where you are shopping, but basic staples, Milk and bread are up more than 50%! The media and our
wonderful government can sugar coat this all they want, but inflation is on the rise with no end in sight! The next
2 years are going to be very painful for us all!!

May 16 2011 at 6:18 PM Report abuse +2 rate up rate down Reply
1 reply to rosecabinets's comment
bggdg

Nobody disputes that inflation has been on the rise. The article even says as much: "In the past 12 months, prices have risen 3.2%. That's the biggest 12-month gain since October 2008". Did you just miss that?

May 16 2011 at 8:36 PM Report abuse +2 rate up rate down Reply
Doug

Need a better interpretor for write-ups. You mean "Better ways of Withdrawing monies from Consumers"!! I would be so damn f-in happy to give all my f-in money away to the gas companies and food chains. WTF, americans are so GD rich, the money just flowing out their aholes!

May 16 2011 at 1:46 PM Report abuse rate up rate down Reply
orchidad

I would like to know who did the fact checking on the .4% (Yes Point 4%) in food prices....Hmmmm, makes you wonder how far Soros will go.

May 16 2011 at 1:18 PM Report abuse +2 rate up rate down Reply
leederone

Re: How do people afford to eat out every nite and all the restaurants are "packed", how is that?. The answer is simple. What you are seeing is the new economy of the haves and have nots. The haves will flood the restaurants and bars and make it look like things are great. Business' are adapting to this and that's why pricing can rise as their NEW customer base yet smaller IS more affluent and will pay the higher prices. Even the McD's of the world are coming out with "exotic" products because they know who their future customers are. Goodbye "middle America".

May 16 2011 at 10:28 AM Report abuse rate up rate down Reply
1 reply to leederone's comment
bggdg

Yes, all the rich people eating McDonald's "exotic" menu! LOL!

May 16 2011 at 11:48 AM Report abuse rate up rate down Reply
puppydrum21

i do not know where they have gas prices that have gone down . ares has droped 2cents. food keeeps going up . go my knew rate from blue cross on health insurance it went up 12.5% .so i think some one is telling storys

May 16 2011 at 8:07 AM Report abuse +3 rate up rate down Reply
henshib

If Huffy's keep Mr. O in office, expect more of the same. Its' the gang that couldn't shoot straight.

May 16 2011 at 7:32 AM Report abuse +2 rate up rate down Reply
Kent

So much BS, the real inflation index is running close to 10%.....When Gas prices are up almost 25%? You cannot even go to Micky D's for less than about $7-$8 for lunch anymore. Housing insurance just rose about 25%. Food has risen about 15+%. Apple juice alone has gone up about 25%, they give you less and charge you the same; not fooling anyone. So again I say, so much BS. It would be nice to see real figures for a change. Bernanke, the Fed, Geitner, and all of them, can kiss my "6"

May 16 2011 at 12:15 AM Report abuse +2 rate up rate down Reply
1 reply to Kent's comment
bggdg

Again, an example of a single or small group of items that have increased more than the overall rate of increase in inflation is NOT evidence of overall inflation higher than that reported. After all, Big Mac's, home insurance, and apple juice are ALL part of the inflation calculation, along with literally thousands of other goods and services. As is always the case, some goods are rising in price more rapidly than the overall rate of inflation, while others are rising more slowly (or even declining). If you are going to make statements about "the real inflation index", it is incumbent that you provide the various inputs, calculation methodology, etc. just as the BLS provides for the CPI. Otherwise, you merely identify yourself as one who refuses to be confused by the facts.

May 16 2011 at 8:13 AM Report abuse -1 rate up rate down Reply
smartprov

How do people afford to go out to eat every night with gas prices and food costs rising? The restaurants are packed with people. It has become unaffordable to eat out in these uncertain economic times. Are they using credit cards to dine out? I just don't understand it. It costs at least $40 for dinner at a "cheap" restaurant for two people. It seems better to dine in or not eat at all...LOL

May 15 2011 at 10:40 PM Report abuse rate up rate down Reply
tanlines001

bggdg, you're a complete idiot. Housing is not a commodity -- consumers buy a house on average once a lifetime. You should blame your lib friend barry fwank for the bottoming out (ha!) of housing prices. Buy a commodity like food -- you can't eat your house, or in your case, youre apartment duffus. If you don't see inflation rising, then you're drinking the kool aid that your saviors obama, timothy geithner, and eric holder are mixin' for you. Complete idiots running the show. And complete idiots swallowing it. We're better than what we have in office now, it will all work itself out in 2012.

May 14 2011 at 8:57 PM Report abuse rate up rate down Reply
1 reply to tanlines001's comment
bggdg

tanlines, are you the reincarnation of Jethro Bodine from the Beverly Hillbillies? It is mind-boggling that there exists imbeciles whose ciphering skills are so lacking as to be unaware of the substantial significance of housing in the average consumers budget, and therefore in the calculation of inflation. Must be another Obama bleating Obama zombie.

May 15 2011 at 8:29 AM Report abuse +1 rate up rate down Reply
munchener

Low inflation? What a joke. The feds EXCLUDE food and energy from the rate. This past years and to date incredible increases in food and energy, lead me to believe the real inlation rate is 30%.

May 14 2011 at 2:12 PM Report abuse +3 rate up rate down Reply
1 reply to munchener's comment
bggdg

NO, the 3.2 % CPI inflation rate for the 12 months, nor the 0.4% rate for April does NOT exclude food and energy. Are you seriously that illiterate?

May 14 2011 at 3:40 PM Report abuse -1 rate up rate down Reply