Investing.com - U.S. annual headline inflation rose in line with expectations in April, while underlying inflation rose less than forecast, underlining the case for the Federal Reserve to stick to its plan for a gradual pace of interest rate hikes.
Consumer price inflation rose by an annualized 2.5% last month the Labor Department said, from 2.4% in the previous month.
Core CPI, a key gauge of underlying consumer price pressures that excludes food and energy costs, rose 2.1% year-on-year. Economists were looking for a gain of 2.2%.
Month-on-month, CPI rose 0.2%, against forecasts for a reading of 0.3%, while core CPI rose 0.1% from a month earlier.
Core prices are viewed by the Fed as a better gauge of longer-term inflationary pressure precisely because they exclude the volatile food and energy categories.
Inflation remains a central concern for markets as increasing price pressures would be a catalyst to push the Fed toward raising interest rates at a faster pace than currently forecast.
Markets widely expect the next rate hike to arrive at the Fed’s June meeting with another hike expected in September, according to Investing.com’s Fed Rate Monitor Tool.
The odds of an additional hike in December, for a total of four in 2018, have been hovering just below the 50% threshold.