Consumer Prices in U.S. Probably Climbed in April as Food, Fuel Costs Rose

The cost of living in the U.S. probably rose in April, led by gains in food and fuel prices that are beginning to filter through to other goods and services, economists said before a report today.

The consumer-price index increased 0.4 percent after a 0.5 percent gain in March, according to the median forecast of 76 economists surveyed by Bloomberg News before a Labor Department report. The so-called core measure, which excludes more volatile food and energy costs, may have increased 0.2 percent.

Improving job prospects are helping sustain consumer spending even as grocery and energy bills climb, which may make it easier for companies like Colgate-Palmolive Co. (CL) to pass rising costs on to customers. The pickup in inflation has yet to alarm some Federal Reserve policy makers, including Chairman Ben S. Bernanke, who predict the acceleration will be temporary.

“Companies are testing the water” with price increases, said David Semmens, a U.S. economist at Standard Chartered Bank in New York. Consumers are “not going to be willing to absorb significant price increases, but there will be more willingness than earlier in the recovery.”

The Labor Department’s price data are due at 8:30 a.m. in Washington. Estimates of the economists surveyed range from gains of 0.3 percent to 0.7 percent.

The projected April increase would mean prices climbed 3.1 percent over the past 12 months, the biggest year-to-year gain since October 2008.

Core Prices

The increase in core prices would follow a 0.1 percent advance in March, according to the Bloomberg survey. The 1.3 percent projected advance from a year ago would be the biggest since February 2010.

Increasing food and energy costs reflect growing unrest in the Middle East and faster global growth. The cost of a gallon of regular gasoline at the pump averaged $3.81 in April, up from $3.54 the prior month, according to data from AAA, the nation’s largest automotive group.

The CPI is the broadest of three monthly price gauges from the Labor Department because it includes goods and services. Almost 60 percent of the CPI covers prices consumers pay for services ranging from medical visits to airline fares and movie tickets.

A Labor Department report yesterday showed the producer- price index in April increased 0.8 percent and the cost of goods excluding fuel and food rose 0.3 percent, both more than forecast. The cost of goods imported into the U.S., also reported this week, rose 2.2 percent from the prior month, higher than the median estimate in a Bloomberg survey.

Raising Prices

Some U.S. companies say customers aren’t cutting back on purchases even amid price increases. Ian Cook, chief executive officer of Colgate-Palmolive, said yesterday that the New York- based toothpaste maker is not seeing consumers resist higher pricing. Cook spoke at a conference sponsored by Goldman Sachs Group Inc.

Commodity prices have retreated since the end of April, on concern rising interest rates in countries from China to India will slow the global economic recovery. Crude oil has dropped 13 percent so far this month on the New York Mercantile Exchange.

The declines may be bearing out Bernanke’s views on inflation. The Fed chairman and some of his colleagues, including Vice Chairman Janet Yellen and Federal Reserve Bank of New York President William C. Dudley, have said in recent speeches that the threat from accelerating prices will prove “transitory.”

Bernanke’s View

“Measures of underlying inflation, though having increased modestly in recent months, remain subdued, and longer-term inflation expectations have remained stable,” Bernanke said last month at a press conference in Washington.

The crosscurrents of rising fuel costs and an improving job market have caused consumer confidence to stagnate. Economists project the Thomson Reuters/University of Michigan preliminary index of consumer sentiment for May will be little changed at 70, compared with 69.8 in April, according to the Bloomberg survey.

The gauge, due at 9:55 a.m. New York time, averaged 89 in the five years leading up to the 18-month recession that began in December 2007.

                        Bloomberg Survey

================================================================
                               CPI     Core     Core  U of Mich
                                        CPI      CPI    Conf.
                              MOM%     MOM%     YOY%    Index
================================================================

Date of Release              05/13    05/13    05/13    05/13
Observation Period           April    April    April    May P
----------------------------------------------------------------
Median                        0.4%     0.2%     1.3%     70.0
Average                       0.4%     0.2%     1.3%     70.0
High Forecast                 0.7%     0.3%     1.4%     75.0
Low Forecast                  0.3%     0.1%     1.2%     66.0
Number of Participants          76       74       38       62
Previous                      0.5%     0.1%     1.2%     69.8
----------------------------------------------------------------
4CAST Ltd.                    0.4%     0.2%     ---      69.0
ABN Amro                      0.4%     0.2%     1.3%     70.0
Action Economics              0.3%     0.1%     1.3%     70.0
Aletti Gestielle              0.5%     0.1%     ---      69.3
Ameriprise Financial          0.4%     0.2%     1.4%     71.4
Banesto                       ---      ---      1.4%     70.0
Bantleon Bank AG              0.3%     0.2%     ---      69.0
Barclays Capital              0.4%     0.1%     1.3%     69.5
Bayerische Landesbank         0.4%     0.1%     1.3%     69.5
BBVA                          0.5%     0.2%     1.3%     71.0
BMO Capital Markets           0.3%     0.1%     1.3%     70.0
BNP Paribas                   0.4%     0.2%     1.4%     70.0
BofA Merrill Lynch            0.4%     0.2%     ---      70.5
Briefing.com                  0.3%     0.1%     ---      70.5
Capital Economics             0.4%     0.2%     1.3%     75.0
CIBC World Markets            0.3%     0.1%     1.2%     ---
Citi                          0.3%     0.1%     1.3%     68.0
Commerzbank AG                0.4%     0.1%     ---      70.0
Credit Agricole CIB           0.4%     0.2%     ---      70.0
Credit Suisse                 0.3%     0.1%     1.3%     72.0
Daiwa Securities America      0.3%     0.2%     ---      70.0
DekaBank                      0.4%     0.1%     1.3%     71.0
Desjardins Group              0.3%     0.1%     1.2%     69.5
Deutsche Bank Securities      0.4%     0.2%     ---      72.0
Deutsche Postbank AG          0.4%     0.2%     1.3%     69.5
DZ Bank                       0.3%     0.1%     ---      71.5
Fact & Opinion Economics      0.4%     0.2%     ---      71.0
First Trust Advisors          0.4%     0.2%     ---      70.0
FTN Financial                 0.5%     0.2%     ---      70.0
Goldman, Sachs & Co.          0.4%     0.2%     ---      ---
Helaba                        0.3%     0.1%     1.3%     68.5
High Frequency Economics      0.3%     0.1%     ---      67.0
Hugh Johnson Advisors         0.4%     0.2%     ---      70.0
Ibersecurities                0.4%     ---      ---      ---
IDEAglobal                    0.5%     0.2%     1.3%     72.0
IHS Global Insight            0.4%     0.2%     ---      70.4
Informa Global Markets        0.5%     0.2%     ---      69.5
ING Financial Markets         0.4%     0.2%     1.3%     71.0
Insight Economics             0.4%     0.1%     ---      71.0
Intesa-SanPaulo               0.6%     0.1%     1.3%     70.2
J.P. Morgan Chase             0.4%     0.2%     1.3%     69.5
Janney Montgomery Scott       0.7%     0.1%     1.3%     ---
Landesbank Berlin             0.4%     0.2%     1.4%     68.0
Landesbank BW                 0.4%     0.2%     ---      71.0
Laurentian Bank               0.3%     0.1%     1.3%     ---
Maria Fiorini Ramirez         0.4%     0.2%     ---      ---
MET Capital Advisors          0.5%     ---      ---      ---
MF Global                     0.4%     0.1%     1.3%     72.5
Mizuho Securities             0.3%     0.1%     ---      69.0
Moody’s Analytics             0.3%     0.2%     ---      69.0
Morgan Keegan & Co.           0.4%     0.2%     ---      ---
Morgan Stanley & Co.          0.4%     0.2%     ---      70.0
National Bank Financial       0.4%     0.1%     1.3%     69.4
Natixis                       0.4%     0.2%     1.3%     68.0
Nomura Securities             0.5%     0.2%     ---      ---
Nord/LB                       0.5%     0.2%     1.4%     69.5
OSK Group/DMG                 0.4%     0.2%     ---      ---
Parthenon Group               0.3%     0.2%     ---      70.0
Pierpont Securities           0.5%     0.2%     ---      69.0
PNC Bank                      0.3%     0.1%     ---      ---
Raiffeisenbank International  0.3%     0.1%     1.3%     68.0
Raymond James                 0.3%     0.1%     1.3%     66.0
RBC Capital Markets           0.4%     0.2%     1.3%     71.0
RBS Securities                0.4%     0.2%     ---      72.0
Scotia Capital                0.4%     0.1%     1.2%     ---
Societe Generale              0.5%     0.3%     ---      ---
Standard Chartered            0.4%     0.2%     1.3%     68.0
State Street Global Markets   0.5%     0.2%     1.4%     68.8
Stone & McCarthy Research     0.3%     0.2%     ---      69.5
TD Securities                 0.4%     0.2%     1.3%     70.0
UBS                           0.3%     0.1%     1.3%     70.0
UniCredit Research            0.3%     0.2%     ---      71.0
University of Maryland        0.4%     0.1%     ---      70.0
Wells Fargo & Co.             0.4%     0.2%     1.3%     ---
WestLB AG                     0.4%     0.2%     1.3%     69.9
Westpac Banking Co.           0.4%     0.2%     ---      ---
Wrightson ICAP                0.4%     0.1%     ---      69.5
================================================================

To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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