MercoPress. South Atlantic News Agency

US consumer prices rising at an annualized 5.1%

United States consumer prices index rose 0.6% in April, the highest in three months and core inflation which does not include energy or food costs 0.3%, according to the latest release from the US Labour Department.

The big increase in one of US most closely watched inflation barometer followed a strong 0.4% advance in March. The "core" prices index also followed on a March 0.3% raising fears that the Federal Reserve might be inclined to further increase interest rates.

The latest readings on inflation were slightly worse than economists were expecting. Before the release of the report they were forecasting a 0.5% increase in overall consumer prices and a 0.2% for core prices.

So far this year, consumer prices are rising at an annual rate of 5.1%, much faster than the 3.4% increase registered for all of 2005. Core prices are advancing at a brisk 3% compared with a moderate 2.2% in 2005.

Last week the Federal Reserve increased interest rates to a five-year high of 5% for the 16th consecutive increase since the Fed began to tighten credit in June 2004.

Fed policy-makers left options for future decisions wide open suggesting another increase might be possible, or even a pause in their rate-raising campaign depending on how inflation and economic activity unfold.

The Federal Reserve is scheduled to meet again next June 28-29.