US inflation rises further in April

US inflation increased 0.6% in April after 0.9% rise in March, in line with expectations, while annualized CPI advanced 3.8% last month, compared to 3.7% forecast and 3.3% increase in March, in the biggest gain in three years.

So called core inflation, stripped for the most volatile food and energy components, was up by 0.4% month on month from 0.2% previous month and increased by 2.8% in 12 months to April after gaining 2.6% in March.

Rise of consumer prices for the second consecutive month comes mainly from surge in oil prices, due to supply shortage on prolonged closure of Strait of Hormuz and increases pressure on the US Federal Reserve to keep interest rates unchanged for some time, with more hawkish stance from the central bank, not ruled out.

Economists expect the Fed to keep its benchmark overnight interest rate in the 3.50%-3.75% range, after the US policymakers have abandoned stance of potential policy easing and that potential deterioration in conditions may prompt the central bank to act earlier.

Higher inflation readings will continue to fuel political risk for President Donald Trump and his Republican party ahead of November’s midterm elections, as many Americans blame him for high oil prices in the petrol stations, after Trump won 2024 election mainly on promise to reduce inflation.