April CPI Numbers Moderate, Opening Door to FED Rate Reduction in June

The U.S. Department of Labor's Bureau of Labor Statistics reported today that the Consumer Price Index (CPI) increased a smaller-than-expected 0.4% in April, boosted by higher prices for energy and groceries.

Excluding food and energy, however, the core CPI rose 0.2% as expected, knocking the annual gain in the core down to a one-year low of 2.3%.

Rents and owners' equivalent rents, the biggest factors in the CPI, increased at the slowest pace in more than a year, reflecting a flood of vacant units in the rental market.

Industry analysts view the news of moderating inflationary pressures on the economy as a basis to expect the Federal Reserve Board to lower interest rates at the June '07 FOMC Meeting in order to stimulate economic growth.