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Wednesday, 16 May, 2001, 14:23 GMT 15:23 UK
US inflation weaker than expected
US shopper
Consumer prices are rising more slowly than expected
US consumer prices in April rose by 0.3%, confirming the tame inflation climate that the US Federal Reserve says allowed it to cut interest rates for a fifth time on Tuesday.

The modest advance in the consumer price index (CPI), the key measurement of inflation, followed a 0.1% increase in March, the US Labor Department reported on Wednesday.

Analysts had been expecting a 0.4% rise in April.

Petrol prices showed the biggest gain in seven months and the cost of tobacco increased by the largest amount in a year.

Economists say tobacco companies have raised cigarette prices to help cover costs related to legal settlements.

Decline in clothing

That was offset by clothing prices which declined to their lowest level in 52 years.

US retailers are cutting prices to lure shoppers back into the stores.

Prices for goods other than food and energy products, described as the "core" rate of inflation, rose by 0.2% in April for the second month in a row.

The inflation report came a day after the Federal Reserve slashed interest rates for a fifth time this year to 4%.

The Labor Department said the Federal Reserved did not have access to the inflation figures before they lowered interest rates on Tuesday.

The cuts total 2.5 percentage points.


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