US inflation jumps to three-year high as gas prices soar
Prices in the United States jumped by their highest amount in more than three years during April, as inflation hit 0.4 per cent, putting more steam behind the chances of further interest rate rises this year.
The consumer prices index moved up from 0.1 per cent in March, as energy prices increased considerably during the month. The cost of gasoline jumped 8.1 per cent over the 31 days as the price of energy climbed.
Over the year, prices were up by 1.1 per cent. That compares to figures out this morning for the UK which showed the pace of annual inflation slipped back to 0.3 per cent in March as air fares came crashing down after a bump in March for the Easter holidays.
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Core inflation, which ignores volatility in the prices of food and energy came in a 2.1 per cent on an annual rate, slightly down on the 2.2 per cent recorded in March.
Average hourly earnings went into reverse in April, however, dropping by 0.1 per cent on the month after growing by nearly one per cent in the first quarter of the year.
Despite disappointing growth figures for the first quarter, a string of good data and optimism in the wider economy have brought the prospect of an interest rate rise in June back onto the cards.
Financial markets were previously pricing in only one rate rise this year, which would take the Federal Reserve's federal funds target rate to between 0.5 and 0.75 per cent.
"Today’s inflation data is a clarion call for a market rethink … a June rate hike cannot be ruled out," said Rob Carnell of ING.