The US economy has encountered some expected turbulence on inflation’s descent.
The Federal Reserve’s preferred inflation gauge bounced higher in April, underscoring Fed Chair Jerome Powell’s warning that reining in price hikes “is likely to be bumpy.” But with spending also heating up, Friday’s data from the Commerce Department kicked up the odds for further rate hikes.
The Personal Consumption Expenditures price index rose 4.4% for the 12 months ended in April, up from a 4.2% increase seen in March, according to data released Friday by the Commerce Department.
The closely watched core PCE index — where volatile components of food and energy are excluded — unexpectedly ticked up: The Fed’s go-to gauge was up 4.7% for the year. In March, the core PCE gauge grew by 4.6%.
Economists had forecast that core PCE would hold steady at 4.6%, according to Refinitiv.
On a monthly basis, the headline and core indexes were both up 0.4%. In March, the headline PCE index showed a 0.1% gain, while core accelerated by 0.3%.
Economists polled by Refinitiv were expecting April’s monthly core price to increase 0.3%.
The PCE indexes are part of the Personal Income and Outlays report, which provides a more comprehensive look at shifts in prices, including how consumers respond to them and how much consumers are spending, bringing in and saving.
Consumer spending jumped 0.8% in April from March, double what economists had expected. Excluding the effects of inflation, real consumer spending increased 0.5%, reflecting a boost seen from new car purchases, according to the report.
This story is developing and will be updated.
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