Consumer prices in the US saw the biggest increase in April in the last three years, according to the Labor Department.

Till Slip, Photo: Pixabay
Till Slip, Photo: Pixabay

( — May 20, 2016) —The biggest consumer price gain is a consequence of the price increase of gasoline and rent.

According to the Labor Department, the Consumer Price Index (C.P.I.) rose last month by 0.4 percent. It is the largest monthly increase since February 2013, after rising 0.1 percent in March, reported Reuters. This took the year-on-year increase in the C.P.I. to 1.1 percent from 0.9 percent in March 2013.

Gasoline prices have risen by 8.1 percent in April, the most since August 2012, while food prices soared 0.2 percent after a decline of 0.2 percent in March.

American citizens also paid more for medical care, food, tobacco, motor vehicle insurance, airline fares, and recreation.

Other data showed that industrial production and housing starts recovered in April 2016, suggesting that the economy was regaining steam early in the second quarter, after stalling earlier in the year.

“The combination of higher prices, housing gains and industrial production support the narrative of a second-quarter rebound in GDP, and will stir talks of the necessity of at least one Fed hike later this year,” Jay Morelock, an economist at FTN Financial in New York, told Reuters.

There are signs that the economy is off to a strong start in the second quarter. The Commerce Department explained that a separate report shows that housing starts increased 6.6 percent to a seasonally adjusted annual pace of 1.17 million units last month, and building permits rose 3.6 percent to a 1.12 million-unit rate. Industrial production also increased 0.7 percent in April, and manufacturing production rose 0.3 percent.

Reuters estimated that April’s rise in consumer prices will probably exhilarate the Federal Reserve System‍ (Fed), whose aim is an inflation rate of 2.0 percent. The financial markets do not expect the Fed to increase interest rates before September 2016 due to the
weak economic growth at the beginning of the year.

In December last year Fed increased the interest rate on overnight loans, for the first time in ten years, and the lawmakers predict two more interest rate rises for this year.