U.S. April consumer prices flat as gasoline drops

WASHINGTON Tue May 15, 2012 8:32am EDT

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WASHINGTON May 15 (Reuters) - U.S. consumer prices were flat in April as households paid less for gasoline and natural gas, possibly giving the U.S. Federal Reserve more room to help economic growth should the recovery stumble.

The Labor Department said on Tuesday its Consumer Price Index was unchanged last month after rising 0.3 percent in March. April's increase was in line with economists' expectations.

Outside the volatile food and energy category, inflation pressures also appeared to be modest. Core CPI edged up 0.2 percent, matching the increase posted in March.

A number of officials at the Fed appear loath to take further action to help the economy, with some arguing the central bank needs to get ready to start removing monetary stimulus.

A separate measure of inflation targeted by the Fed, and which is not included in Tuesday's report, continues to hover around the central bank's 2 percent goal.

The Fed has maintained since January that it expects economic conditions to warrant holding interest rates near zero through at least late 2014.

Last month, the CPI index was held back by a 2.6 percent fall in gasoline prices. Natural gas prices dropped 1.8 percent. Prices also fell for fuel oil.

Food prices climbed 0.2 percent last month.

Overall consumer prices rose 2.3 percent year-on-year, down from a reading of 2.7 percent in March. In the 12 months to March, core CPI increased 2.3 percent, the same pace clocked in March.

Rising gasoline prices have helped keep the overall inflation hotter than core inflation in recent years. April was the first month since October 2009 that headline 12-month reading did not exceed the measure of core inflation.

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