- The Washington Times - Wednesday, April 19, 2006

ASSOCIATED PRESS

Consumer prices shot up by a bigger-than-expected amount last month, reflecting higher costs for gasoline, clothing and hotel rooms.

The Labor Department reported that its closely watched Consumer Price Index rose by 0.4 percent, far higher than the modest 0.1 percent gain in February.

The inflation surge was led by higher gasoline prices, which jumped by 3.6 percent.

With oil prices climbing to record levels above $70 per barrel this week, analysts said motorists should brace for more pain at the pump in coming months. Core inflation, which excludes food and energy, posted a 0.3 percent rise last month.

It was the biggest gain in core inflation in a year and could be a worrisome signal that higher energy prices are starting to spill over into more widespread inflation pressures.

Through the first three months of this year, overall inflation has been rising at a 4.3 percent annual rate, far above the 3.4 percent price increase for all of 2005.

The price acceleration reflected rising energy prices, which are up 21.8 percent at an annual rate through March, compared with a 17.1 percent rise for all of 2005.

Economists are worried that the relentless rise in energy prices could start to spread, resulting in inflationary pressures on the broad spectrum of the economy.

Core inflation, excluding energy and food, was up at an annual rate of 2.8 percent in the first three months of this year, slightly higher than the 2.2 percent increase for all of 2005.

However, the 0.3 percent rise in core inflation last month was the biggest one-month gain since a similar 0.3 percent increase in March 2005.

The stock market soared on Tuesday after the Federal Reserve indicated in minutes of its March 28 meeting that its long string of interest rate increases to keep inflation under control could be drawing to a close.

But Fed officials have said that future moves will be heavily dependent on economic data, and economists are worried that inflation might be surging.

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