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The Honolulu Advertiser

Posted on: Thursday, May 16, 2002

Consumer price index up 0.5% for April

By Jeannine Aversa
Associated Press

WASHINGTON — Consumer prices jumped by 0.5 percent in April, the largest increase in almost a year, led by sharply higher costs for gasoline, airfares and hospital services.

The advance in the Consumer Price Index, a closely watched inflation gauge, followed a 0.3 percent increase in March, the Labor Department reported yesterday.

Excluding volatile energy and food prices, the "core" rate of inflation rose 0.3 percent in April. That followed a 0.1 percent rise in March.

In a second report, industrial production at the nation's factories, mines and utilities increased in April for the fourth straight month, rising 0.4 percent, the Federal Reserve reported. The report provides further evidence that the manufacturing sector —hardest hit by last year's recession — is on the comeback trail.

Production of cars, trucks and automobile parts rose a solid 3.1 percent last month. Makers of home electronics saw output rise 0.4 percent. Computer production increased 1.6 percent, while business equipment output edged up 0.1 percent.

The latest reading on inflation was a bit worse than many analysts were expecting.

They were forecasting a 0.4 percent rise in overall prices and a 0.2 percent advance in the core rate.

With the economy on the rebound from the recession, analysts generally aren't expecting inflation to become a problem.

To cope with the slump, many companies heavily discounted merchandise to bolster sales. After seeing their profits take a hit, companies are itching to raise prices but probably will be restrained by competition and cheaper-priced imported goods flowing into the United States, analysts say.

Citing uncertainties about the vitality of the recovery, the Federal Reserve last week left short-term interest rates unchanged at 40-year lows.