US annual inflation rises amid higher oil prices

The annual US inflation rate, based on the Consumer Price Index for all urban consumers (CPI-U), advanced 3.8% last month – higher than the 3.3% growth seen in March, according to the data released by the US Bureau of Labor Statistics (BLS).

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Brent’s crude price has remained elevated following the inflation data, which comes amid the outbreak of a major Middle East conflict, after the US and Israel launched coordinated strikes on Iran.

The higher inflation reading has boosted expectations of another interest rate hike by the US Federal Reserve (Fed), Vanda Insights’ founder Vandana Hari said.

Higher interest rates in the US can weigh on demand growth and make dollar-denominated commodities like oil more expensive for holders of other currencies.

Commenting on the annual CPI print, SPI Asset Management managing partner Stephen Innes wrote, “inflation is proving sticky again, as oil remains elevated.”

However, on month-on month basis, the US inflation rate increased by 0.6% in April, lower than the 0.9% growth noted in March.

The month-on-month data represents the first weaker inflation reading since the beginning of the Middle East conflict on 28 February.

Notably, the US central bank remains focused on bringing inflation down to its 2% target.

By Aparupa Mazumder

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