Inflation eases but food prices head higher in April
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The Department of Labor released the Consumer Price Index numbers for April. The CPI for all urban consumers rose 0.2 percent on a seasonally adjusted basis. The index in energy remain unchanged but after a 1.9% increase in March. The index for petroleum based products fell 1.6% offsetting a 2.5% increase in the index for energy services. The food index however continued to head higher posting an increase 1.5% for all six major grocery store groups.
Gasoline prices rose 5.6 percent in April. Compared to a year ago, these prices were up 20.9 percent. Gasoline prices increase seasonally during the first five months of the year, with the largest increases occurring in March and April and decline seasonally for the remainder of the year. According to the EIA, The average price of Gasoline for US consumers inched higher from $3.613 a gallon from a week ago to $3.722 as of 05/12, an increase of 3%.
The Federal reserve has been cutting the Federal funds rate in an attempt to fend of the looming credit crisis. However with a series of cuts in an almost emergency fashion, economists are now worried about the possibility of a recession. In it’s last rate cut, the Federal reserve hinted at the possibility that inflationary forces are becoming significant and that they may maintain the status quo with the current Federal Funds rate.
