MercoPress. South Atlantic News Agency

US April inflation 0,2% but?

United States consumer prices rose 0,2% last April, lower than the 0,5% of March and below the 0,3% expected by market forces, but there are growing concerns about inflation as the economy rapidly begins to pick up.

Actually consumer prices in the US have risen 4,4% between January and April 2003, far above the 1,9% during the whole of 2003.

However the so called structural index, which excludes volatile elements such as food and energy increased 0,3%, above expectations, and in the last twelve months reached 1,8% the highest, since late 2003. Similarly the structural index has been expanding in 2004 at an annual 3,3%.

Another concerning index released by the US Labour Department was April wholesale prices which also experienced the highest rise in one year, 0,7%, a dramatic change from a year ago when the Federal Reserve (US Central Bank) was fearful of deflation, that is when prices begin dropping and can bring the overall economy to a grinding halt.

No wonder the Fed said last week that "long term inflation expectations appear to have remained well contained", but Chairman Alan Greenspan also cautioned about energy prices.

Analysts and world markets are convinced the Fed will soon begin to raise interest rates, "gradually" and several times thereafter for the rest of the year.

The May index could bring more surprises given this month's dramatic increase in oil prices.