Core inflation remained low last month as the Consumer Price Index rose 0.4 percent in April and at a 6.2 percent annualized rate over the last three months, according to the Bureau of Labor Statistics' latest report on the consumer price and the producer price indexes. A rapid increase in energy prices continues to drive headline inflation. Energy prices were up 2.2 percent last month and were at a 42.8 percent annualized rate over the last three months as they recovered from 2008, when they fell 35 percent in just five months. Energy prices currently stand at 7 percent below the peak in July of that year.
With core inflation remaining low and real hourly earnings flat or falling over the last six months, there is little general concern of rapid price increases. (The average real wage has fallen 1.6 percent in the last two years.) As energy prices return to their 2008 levels, some slowing of headline inflation may result.
For more, check out our latest Prices Byte.