News Story

U.S. Retail Inflation Inches Up in April

- U.S. consumer prices picked up slightly in April, hitting the Federal Reserve's target of an annual rate for the first time this year after three months of undershooting.

The consumer price index rose 2.0% from a year ago, while core inflation, that excludes volatile food and energy costs, increased 2.1%.

The headline number rose less than expected on both a monthly and annual basis, although the annualized reading in core inflation was in line with consensus.

While U.S. futures and Treasury yields showed no reaction to the data, the U.S. dollar index ticked lower following the release, down 0.2% to 97.01 by 8:42 AM ET (12:42 GMT), compared to 97.13 ahead of the release.

The Fed has repeatedly cited sluggish inflation as a primary reason why it can hold off on hiking rates this year.

Inflation has remained stubbornly low despite better-than-expected economic growth and a strong labor market.

U.S. President Donald Trump has pressured the Fed to lower interest rates by up to 100 basis points and to resume 'quantitative easing' in order to spur economic growth, He had criticized both QE and the Fed's low interest-rate policy before becoming President.

Vice President Mike Pence took up the call to lower rates after last week’s jobs report.

“We just don't see any inflation in this economy at all,” he told CNBC in an interview last Friday.

Fed Chairman Jerome Powell said after the central bank's last policy meeting that there was no compelling reason for interest rates to move either higher or lower in the near term.

Since the Fed’s preferred inflation measure, the core personal consumption expenditure (PCE) price index, sank to 1.6% in March, the chorus of policymakers has suggested that it was due to “transitory” factors, including a 30% drop in wholesale gasoline prices between September and December last year. That has largely reversed in the meantime.

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