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May 17, 2016 8:55 AM, EDT

Consumer Prices Climbed in April by Most Since 2013

Lars Plougmann/Flickr

The cost of living in the U.S. climbed in April by the most in three years, an indication that inflation may be picking up toward the Federal Reserve’s goal.

Consumer prices increased 0.4%, the biggest gain since February 2013, following a 0.1% advance in March, a Labor Department report showed May 17 in Washington. The so-called core measure, which strips out food and energy costs, rose 0.2% after a 0.1% gain the prior month.

The biggest jump in gasoline prices in almost four years is leading a rebound in fuel costs that is laying the groundwork for overall inflation to climb higher, while a slight weakening in the dollar will support a pickup in core prices to a level near the Fed’s 2% target. A strengthening job market is also helping boost pay, which may prompt companies to raise prices to prevent profits from weakening.

“We’re seeing budding, but by no means in full bloom, inflation,” said Stuart Hoffman, chief economist at PNC Financial Services Group Inc. in Pittsburgh, who correctly forecast the increase in consumer prices. “Some of that is just a reversal of the huge fundamental decline in oil and gasoline that we’ve seen, and the other part is the service side of the economy.”

Economists expected total prices to rise 0.3% from the month before, according to the median Bloomberg News survey estimate of forecasts that ranged from advances of 0.2% to 0.7%. The CPI climbed 1.1% in the 12 months ended April after rising 0.9% in the previous period.

The increase in core prices matched the median estimate of economists surveyed. Projections ranged from no change to a gain of 0.3%. On a year-over-year rate, core prices rose 2.1% in April after climbing 2.2% the prior month.

The report showed energy costs increased 3.4% from the prior month, the most since February 2013. Gasoline jumped 8.1%, the most since August 2012.

The nationwide average cost of a gallon of regular gasoline has climbed in all but two of the past 13 weeks, reaching $2.22 as of May 15, according to AAA, the biggest U.S. motoring group.

Food prices increased 0.2% in April after a 0.2% decline the month before.

The core index was boosted by increases in rents, medical care, auto insurance and airline fares. Declines in costs of household furnishings, clothing and new and used cars held back the gain.

Fed officials are looking for signs that inflation is heading higher as they gauge when to raise their benchmark interest rate. Inflation makes up half of the central bank’s dual mandate of price stability and maximum employment. While the labor market has made steady progress over the past two years, prices have been slower to pick up toward the Fed’s target, serving as evidence to some economists that policy makers should only gradually raise their benchmark interest rate.

The central bank’s preferred price-growth gauge is the Commerce Department’s personal consumption expenditures measure, which hasn’t met the Fed’s 2% goal in four years.

The CPI is the broadest of three price gauges from the Labor Department because it includes all goods and services. About 60% of the index covers prices consumers pay for services from medical visits to airline fares, movie tickets and rents.

The Labor Department’s gauge of wholesale prices, which includes 75% of all U.S. goods and services, climbed 0.2% in April from the month before, buoyed by firmer costs for portfolio management services. A separate report last week showed the cost of imported goods rose 0.3% in April, less than forecast. However, non-fuel import prices climbed for the first time since July 2014.