Consumer Prices Hold Steady as Gas Costs Fall

Consumer price indexBy CHRISTOPHER S. RUGABER

WASHINGTON -- U.S. consumer prices were flat last month as cheaper gas offset modest increases for food, clothing and housing. The data indicate that inflation remains in check.

The Labor Department said Tuesday that the seasonally adjusted consumer price index was unchanged in April, after a 0.3% gain in March. Excluding volatile food and gas costs, so-called "core" prices rose 0.2%. That was the same as in March.

Over the past 12 months, prices have risen 2.3%, the smallest increase in more than a year. Core prices have also risen 2.3% in the past year, close to the Federal Reserve's inflation target of 2%.

Gas prices fell 2.6% in April, the biggest decline in six months. Food prices and housing costs both ticked up 0.2%.

Inflation has eased since last fall, outside of a spike in gas prices earlier this year. But gas prices appear to have peaked in April and have since fallen sharply.

The national average fell to $3.73 a gallon on Monday, roughly 17 cents cheaper than a month ago, according to a survey by AAA.

Mild price increases leave consumers with more money to spend, which tends to boost economic growth. Lower inflation also gives the Fed more leeway to keep interest rates low.

Still, Americans are seeing little growth in wages. Workers' average hourly earnings have risen just 1.3% in the 12 months, roughly half the pace of inflation over that same period.

Without more jobs or higher pay, consumers could be forced to cut back on spending later this year. Consumer spending is critical because it accounts for 70% of economic activity.

A small amount of inflation can be good for the economy. It encourages businesses and consumers to spend and invest money sooner rather than later, before inflation erodes its value.

The Fed last month reiterated that it planned to keep its key interest rate at a record low through at least late 2014. That's not likely to change when the Fed next meets on June 19-20.

The Fed acknowledged that rising energy prices have boosted inflation. But Fed Chairman Ben Bernanke contends that the boost in inflation should be temporary and will recede as energy prices retreat.

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Setanta

ask the oboMBa_bot morons how THEIR hopey changie bs is WORKING and REMIND THEM ALL that when oboMBa was INSTALLED,gas was 1.79 A FREEEEEEEEEEEEEEKIN GALLON.--THAT'S WHAT obummer INHERITED.
ask them in your grocery store the same.
vote every single diM/RINO out of the house.
and NEVER FORGET WHO BROUGHT US the NDAA,housing/mortgage/banking MESS--sure as hell wasn't buuuuuuuuuush -
franks dodd should be incarcerated.

May 17 2012 at 1:36 PM Report abuse +1 rate up rate down Reply
Setanta

when will THEY admit to the INFLATION killing us ?
food prices have just about DOUBLED and of course fuel is added on BUT WHAT ABOUT the lousey purchasing """power""" of the almighty DOLLAR ?
and these SAME MORONS WILL NOW INCREASE OUR TAXES.
buuuuuuuush tax RATES EXPIRE and these TAX RATES went across "the board" so to say-they were NEVER JUST for the so-called "rich"
obummer and the diM tax INCREASES WILL AFFLICT ALL.
all people bustin their arses should get informed -
it's going to come down to WHY WORK ?

network network network with LIKE MINDED PEOPLE--
and you STILL THINK that an election can STRAIGHTEN OUT THIS MESS ?

May 17 2012 at 1:19 PM Report abuse +1 rate up rate down Reply
gymgorilla2

In southern California gas prices within the passed week have rocketed 18 to 20 cents per gallon. Nope, everythings looking great so far. LOL

May 16 2012 at 7:58 PM Report abuse +1 rate up rate down Reply
.kowalski440mag

92.65/brl close today......gas should be 2.85 not 3.42. Gas was under $3/gal when oil was below $95/brl. on it's convoluted way up to bogu$110/brl.

May 16 2012 at 4:52 PM Report abuse rate up rate down Reply
1 reply to .kowalski440mag's comment
Setanta

LOL--you really think THE PRICES AUTOMATICALLY go UP or DOWN ?
they have to cover their losses and expenses FIRST-

May 17 2012 at 1:21 PM Report abuse rate up rate down Reply
democracks0

Evan still waits patiently for his Obama money to come in the mail. You know from Obamas stash. LMAO

May 16 2012 at 1:09 PM Report abuse +3 rate up rate down Reply
democracks0

Somey/Evan what a duo! LMAO

May 16 2012 at 1:06 PM Report abuse +1 rate up rate down Reply
z4rock

Too quick things to turn this economy around.

1. Say Drill Baby Drill and mean it.
2. Turn the water back on in California where 25% of the worlds vegatables and fruit used to be grown till democrats voted to pump the water into the ocean.

May 16 2012 at 11:38 AM Report abuse +3 rate up rate down Reply
z4rock

$4 LOWER????????? Only to an Obama Groupee!!

May 16 2012 at 11:33 AM Report abuse +3 rate up rate down Reply
1 reply to z4rock's comment
democracks0

And Obamites

May 16 2012 at 1:00 PM Report abuse +2 rate up rate down Reply
jimskil

Not in California -- prices have risen .15 per gallon over the pat two weeks. Industry claims shortage due to
shut down of a couple of refineries for maintenance. ??????

May 16 2012 at 10:02 AM Report abuse -1 rate up rate down Reply
great462

If the price of gasoline and diesel fuel drops to a reasonable price i.e.1.50 per gallon, the American economy would be strengthened dramatically ,there would be more money in the hands of the people to purchase needed goods at a reasonable price ; since all goods produced or grown are affected by fuel costs.
By reducing fuel costs it would put over 2 dollars per gallon back into the economy and not in the hands of greedy oil companies and politicians. But we all know this will not happen our Government is to damn CORRUPT to let this happen

May 16 2012 at 9:17 AM Report abuse -1 rate up rate down Reply
1 reply to great462's comment
wfreeberg

You drop fuel prices to $1.50 you close down a lot of industries and put a lot of people out of work. Who's going to refine it at that price, no refinement, no tankers on the road, no service stations that can afford to pump it. Also, how will that impact the state fuel tax?

May 16 2012 at 9:39 AM Report abuse rate up rate down Reply