U.S. consumer prices increased by the most in nearly 12 years in April as booming demand amid a reopening economy pushed against supply constraints, which could add fuel to financial market fears of a lengthy period of higher inflation, Reuters reported. The report from the Labor Department on Wednesday also showed a strong buildup of underlying price pressures, extending a stock selloff on Wall Street. Most economists were, however, unwavering in their belief that the surge in prices would be temporary, noting that the main drivers of the bigger-than-expected inflation increase were hotels and airlines, industries that were hardest hit by the coronavirus pandemic. Bottlenecks in the supply chain, which led to a record jump in prices of used cars and trucks last month, were expected to ease. Federal Reserve Chair Jerome Powell has similar views. "This is not a sign of an inflation problem," said Robert Barbera, director of Johns Hopkins University's Center for Financial Economics. "We have the capacity to produce this stuff, we simply need time to get things back on line." The consumer price index jumped 0.8% last month, the largest gain since June 2009. The CPI rose 0.6% in March. A 10.0% surge in prices of used cars and trucks, the most since the series started in 1953, accounted for over a third of the increase in the CPI last month. That followed a 0.5% rise in March. Motor vehicle production has been hampered by a global semiconductor chip shortage, boosting demand for used automobiles.
