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Core CPI Comes in Tame

The headline CPI is up 0.5%, while core inflation is unchanged.
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High energy prices got through to end markets in April, the Commerce Department said, pushing up the consumer price index by a larger-than-expected 0.5%. Absent energy, however, prices were tame, bolstering views that the

Federal Reserve

need not adopt more aggressive anti-inflation measures.

The government report follows Tuesday's troubling report on wholesale inflation, in which the producer price index rose 0.6% and the core PPI, which excludes food and energy, rose 0.3%.

Wednesday's report on consumer prices was benign on the core level, showing no change from March. On average, economists had expected a 0.4% rise in the headline CPI and a 0.2% rise in the core number.

Stock and bond prices both rose on the news, with traders focusing on the core number. Futures on the

S&P 500

went from 2 points below fair value to 2 points above, while the yield on the 10-year note fell from 4.11% to 4.07%.

Energy prices made the difference in April's headline print, rising 4.5% in April for their biggest monthly gain in more than two years. Food prices rose 0.7%, while prices for homes and medical care also increased. The price of clothes and new cars fell.

The consumer price index rose 0.6% in March. Core prices in April were up 2.2% from a year ago.