May 15, 2008 in Business

Inflation lower despite rising food prices

Martin Crutsinger Associated Press
 

WASHINGTON – Inflation pressures eased a bit in April despite the biggest jump in food prices in 18 years.

The Labor Department reported Wednesday that consumer prices edged up 0.2 percent last month, compared to a 0.3 percent rise in March.

The lower inflation reflected a flat reading for energy, which helped offset a 0.9 percent jump in food costs as prices climbed for many basic items, from bread and milk to coffee and fresh fruits.

The unchanged reading for energy reflected a big 4.8 percent jump in natural gas prices, offset by a 2 percent decline in gasoline costs. The reported drop in gasoline prices reflected the government’s accounting process, which discounts expected seasonal price changes.

Core inflation, which excludes food and energy, showed prices well behaved in April, rising by just 0.1 percent, compared to a 0.2 percent gain in March.

The 0.2 percent reading for the overall Consumer Price Index was slightly lower than the 0.3 percent rise that economists had been expecting and the 0.1 percent rise in core inflation was below the 0.2 percent reading that had been expected.

So far this year, overall inflation is rising at an annual rate of 3 percent, down from a 4.1 percent increase for all of 2007. Core inflation, excluding energy and food, is up at an annual rate of 1.8 percent in the first four months of this year, compared with a 2.4 percent increase for all of 2007.

Even with the slowdown in price increases so far this year, workers’ wages are not keeping up. A separate Labor Department report showed that average weekly earnings for nonsupervisory workers dropped by 1 percent in April compared with a year ago, after adjusting for inflation. It was the seventh straight month that inflation-adjusted wages were down compared to a year ago.

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