In April, consumer prices in the USA saw their biggest gain in more than three years: gasoline and rents increased, pointing to a steady buildup to inflation.
On Tuesday, additional data revealed that industrial production and housing stats strongly rebounded last month, an indication that the economy was again starting to gain steam early.
“The combination of higher prices, housing gains, and industrial production supports the narrative of a rebound in G.D.P.,” said Jay Morelock, an economist at FTN Financial in New York.
The Labor Department reports that its Consumer Price Index increased by 0.4% last month. This has been the biggest gain seen since February 2013, after rising 0.1% in March. This takes the year-on-year increase in the C.P.I. to 1.1% from 0.9% in March.
In addition, Americans paid more for food, medical care, motor vehicle insurance, recreation, airline fares, grooming, and tobacco.
The core CPI strips out food and energy costs, and it rose by 0.2% after a 0.1% climb in March. In the 12 months through April, the core C.P.I. increased 2.1% after seeing an increase of 2.2% in March.
The Federal Reserve target for inflation is set at 2% and currently its tracked inflation rate is at 1.6%.
In yet another report, the Commerce Department reports a 6.6% increase in housing stats to a seasonally adjusted annual pace of 1.17 million units for the previous month. Meanwhile, builders are ramping up single and multifamily home construction. Building permits have risen from 3.6% to a 1.12 million-unit rate.
The report released by the Feds reported that in April, industrial production increased 0.7% after two straight months where declines occurred. Manufacturing output rose 0.3% reversing March’s 0.3% decrease.
In April, utilities production jumped 5.8%; however, mining output fell by 2.3%. Mining production remains undermined by the delayed pass-through of the oil price plunge, from June 2014 to December 2015, causing a sharp reduction in capital spending by energy firms.
The inflation report shows last month gas prices jumped 8.1%, making it the largest gain since August 2012, and adding to March’s 2.2% increase. Food prices increased by 0.2% after they fell 0.2% in March.
The core CPI was lifted by medical costs, transportation services, and housing costs. Owners’ equivalent rent of primary residence rose 0.3% after a March increase of 0.2%.
Medical care costs increased with a 0.3% rise after a March gain of 0.1%. Prescription drugs rose 0.7% while hospital service costs increased by 0.3%.
For a second straight month apparel prices fell, as did the cost of used vehicles, and new motor vehicles saw a 0.3% decrease.