The Fed’s favorite inflation index rose 4.9% in April as a sign that inflation could slow.

The Federal Reserve’s preferred inflation gauge rose 4.9% from a year ago to April, but the level of indication that price pressures could ease a bit is still rising. Reported by the Ministry of Commerce Friday.

The rise in the Core Consumer Expenditure Price Index is in line with expectations and reflects the slowdown from the 5.2% reported in March. This figure does not include volatile food and energy prices that are the main cause of inflation around the 40-year peak.

The 0.3% increase on a monthly basis is the same as in March, consistent with the Dow Jones estimates. The monthly rise was curbed by the subsequent reversal of the fall in energy prices in April.

Including food and energy, April headline PCE increased 6.3% from a year ago. This was also a slowdown from the previous month’s 6.6% pace. However, monthly changes showed a more pronounced setback, with an increase of only 0.2% compared to the 0.9% surge in March.

People shop at a supermarket in Washington, DC on May 26, 2022. As inflation continues to rise, Americans are preparing for the summer sticker shock.

Nicholas Come | AFP | Getty Images

Data showed that consumers continued to spend, but were using their savings to do so.

“Consumers haven’t hesitated to inflate last month and have significantly increased their spending and changed their mix to services such as bars, restaurants, travel and recreation,” said Robert Flick, corporate economist at the Federal Navy Cooperative Banking. Said. “This spending was partially fueled by rising wages and the withdrawal of more money from the savings, which is a huge stockpile of at least $ 2 trillion.”

In addition to inflation data, BEA reported that personal income increased 0.4 percent in a month, down 0.1 percentage points from March, and slightly below the 0.5 percent estimate. However, consumer spending remained higher than expected by 0.9%, although it was below the upwardly revised 1.4% in March.

After-tax profit was flat for a month after declining 0.5% in March.

Inflation in the last few months has been moving at a pace not seen since the early 1980s. Unprecedented fiscal stimulus has driven prices up as supply cannot keep up with demand. Covid pandemicWith a blockage in the global supply chain War in Ukraine It has caused energy prices to skyrocket and threatened food shortages.

Lower inflation has brought some relief to the White House, but gas will once again be a factor when the May figures for next month are released. According to AAA, pump prices soared again in May, rising more than 11% from a month ago and 51% from this time last year.

In a statement, President Joe Biden said the April report was “a sign of progress, despite more work to be done.”

In response to price pressures, the Fed has implemented two rate hikes totaling 75 basis points, indicating that a series of rate hikes are likely to occur until inflation approaches the central bank’s 2% target. ..

The number of PCEs reported on Friday is lower than the consumer price index used by the Bureau of Labor Statistics. The April headline CPI rose 8.3% from last year.

The two numbers differ in that the CPI tracks data from consumers and the PCE is extracted from the enterprise. The Fed sees PCE as a broader measure of what’s happening at different levels of price.

The Fed’s favorite inflation index rose 4.9% in April as a sign that inflation could slow.

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