U.S. consumer prices rebounded less than expected in April as rising costs for gasoline and rental accommodation were tempered by a moderation in healthcare prices, pointing to a steady buildup of inflation.
The Labor Department said on Thursday its Consumer Price Index rose 0.2 percent after slipping 0.1 percent in March. In the 12 months through April, the CPI increased 2.5 percent, the biggest gain since February 2017, after rising 2.4 percent March.
Excluding the volatile food and energy components, the CPI edged up 0.1 percent after two straight monthly increases of 0.2 percent. The so-called core CPI rose 2.1 percent year-on-year in April, matching March's increase.
Economists had forecast the CPI rebounding 0.3 percent in April and the core CPI climbing 0.2 percent.
The Federal Reserve tracks a different inflation measure, which is now flirting with the U.S. central bank's 2 percent target. The personal consumption expenditures price index excluding food and energy accelerated to 1.9 percent year-on-year in March as last year's big declines in the price of cell phone service plans dropped out of the calculation.
Economists expect the core PCE price index, which had increased 1.6 percent in February, to breach its target in May.
Gasoline prices rebounded 3.0 percent in April after tumbling 4.9 percent in March.
Further increases are likely after crude oil prices jumped to 3-1/2-year highs on Wednesday in the wake of President Donald Trump's decision on Tuesday to pull the United States out of an international nuclear deal with Iran.
Food prices rose 0.3 percent last month after nudging up 0.1 percent in March. Food consumed at home increased 0.3 percent, the biggest gain since March 2017.
Owners' equivalent rent of primary residence, which is what a homeowner would pay to rent or receive from renting a home, rose 0.3 percent last month after a similar gain in March.
But healthcare costs nudged up 0.1 percent after advancing 0.4 percent in March, helping to restrain the increase in the core CPI. Prices for used cars and trucks tumbled 1.6 percent in April, the largest drop since March 2009.
The cost of recreation fell 0.4 percent last month, the biggest decline since December 2009. Apparel prices rose 0.3 percent in April after falling 0.6 percent in the prior month.