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Key US inflation index edges higher in April

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Washington (AFP)

A jump in energy prices helped nudge US inflation a little higher in April but price pressures remained well short of the Federal Reserve's target range, according to government data released Friday.

The Commerce Department report also showed spending by American consumers slowed in April as even as they got their largest bump in disposable income in six months.

The latest batch of tame inflation numbers may support the Fed's "patient" approach to interest rates this year. However, economists are warning that President Donald Trump's new tariffs on Mexico make a rate cut more likely due to impact on the US economy, possibly before the end of the year.

Rising costs for energy and non-durable goods pushed the Personal Consumption Expenditures price index, which tracks changes in goods and services prices for individuals, up 0.3 percent compared to March, matching analyst expectations.

The energy index posted a hefty 2.9 percent increase, while costs for durable goods -- a sector including autos which has suffered weak sales in recent months -- and food both fell.

Compared to April of last year, the PCE index rose to 1.5 percent, its highest level since December, a tenth of a point higher than March but still well below the Fed's two percent inflation target.

When the volatile food and fuel categories are stripped out, the "core" monthly PCE gain for April was a slower 0.2 percent.

The 12-month core measure also rose a tenth of a point to 1.6 percent, but has been below the Fed's target since December.

Ian Shepherdson of Pantheon Macroeconomics said the numbers supported the Fed Chairman Jerome Powell's view that recent weakness in inflation was due to transient factors.

However he said the index was unlikely to return to the Fed's target level before the end of this year "at the earliest."

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