The Labor Department reported that consumer prices jumped 0.3 percent in April, due largely to the rising cost of food, motor fuel, and other transportation items as the annual rate of inflation in the U.S. now stands at 2.0 percent. Excluding food and energy, prices rose 0.2 percent last month, now up 1.8 percent from a year ago.
This marked the biggest increase in the cost of living in 10 months and, after yesterday’s surge in wholesale prices as noted here, signals new concern over rising inflation, a topic that has been off-the-radar of both investors and policy makers at the Federal Reserve.
Three times in the last eighteen months annual inflation has risen to 2.0 percent, but it has not exceeded that level since late-2012 as it came down from multi-year highs in 2011 that, not coincidentally, marked the all-time nominal high for the gold price.
Price gains were broad based on both a monthly basis and from a year ago. Interestingly, for the first time that I can recall in many years, the chart below shows not a single major category with a price decline on either a monthly or yearly basis.
Food prices rose 0.4 percent for the third straight month and are now up 1.9 percent from a year ago with much bigger year-over-year gains likely to come in the period ahead. The cost of meat increased 2.9 percent last month, the biggest jump in more than a decade, and pork prices surged 4.1 percent, the largest increase since 1986.
Gasoline prices jumped 2.3 percent and overall energy costs are now 3.3 percent higher on a year-over-year basis. The cost of transportation services rose 0.7 percent in April, paced by a 2.6 percent surge in airline costs and a 0.9 percent increase in auto insurance.
Overall shelter costs rose 0.2 percent and are 2.8 percent higher than a year ago while medical care services increased 0.2 percent last month, now up 2.7 percent from a year ago.