U.S. consumer confidence up, but prices set to rise
American shoppers absorbing higher food prices
U.S. consumer confidence rose in April to its highest level since last July, as Americans shook off the effects of a bitter winter.
The Thomson Reuters/University of Michigan index of consumer sentiment climbed to 82.6, well above the 80 it recorded last month.
At the same time, the U.S. Labor Department reported the producer price index ,which measures price changes before they reach the consumer, rose 0.5 per cent in March.
The producer price index shows the price of clothing, jewelry, chemicals and especially food on the rise.
Meat prices soaring
Wholesale food prices rose 1.1 per cent last month, led by a 30.4 per cent leap in the costs of hogs and 12.4 per cent increase in poultry.
Average gasoline prices are also up at about $3.62 US a gallon.
But the consumer confidence index shows shoppers seem to be sanguine about both higher food prices and higher energy costs.
That may be because employment opportunities are on the rise and consumers are looking forward to a modest increase in wages.
New jobless claims dropped by 32,000 to 300,000 in the week ended April 5, the lowest since May 2007, according to data released yesterday.
Shoppers could help Canadian exports
That could lead to a bigger boost in the consumer spending later in the year, helping to power the U.S. economy.
It also could help Canada’s economic performance, as exports are likely to rise to our largest trading partner.
U.S. inflation has been well below two per cent in the last two years, and that’s been a concern to economists. The U.S. Federal Reserve has said it would like inflation to be closer to two per cent before it starts raising interest rates.
The producer price index rose just 1.2 per cent in 2013 after a 1.4 per cent increase in 2012.