WASHINGTON - Declining energy costs are keeping a lid on inflation, but health care prices are jumping.
U.S. consumer prices edged up 0.1 percent in April over the previous month, when prices rose a modest 0.2 percent, the Labor Department said Friday. The April uptick was the smallest monthly gain since prices fell 0.7 percent in January.
Energy costs were down 1.3 percent and food prices were unchanged, keeping inflation low.
Although price growth overall was weak, core inflation, which excludes volatile food and energy, increased 0.3 percent. It was the biggest gain in 15 months. Core inflation was driven higher by a 0.7 percent rise in medical care, reflecting a surge in hospital costs. That was the biggest one-month jump in medical care in eight years.
Ian Shepherdson, chief economist with Pantheon Macroeconomics, notes that the core rate of inflation over the last three months is an annualized 2.6 percent, the highest since August of 2011.
Paul Ashworth, chief U.S. economist with Capital Economics, said the signs that inflation is starting to rise puts pressure on the Federal Reserve to raise interest rates later this year.
"Overall, with the employment cost index suggesting that wage growth is accelerating and the [Consumer Price Index] indicating that underlying price inflation is rising, the Fed can't wait forever before beginning to raise interest rates from near-zero," he said in a research note. "September is still the most likely lift-off date, but July is not out of the question, particularly not if we get another couple of robust rises in core consumer prices in May and June."