US consumer prices rose in April, which could support the Federal Reserve’s claim that recent low inflation rates were temporary and allow the central bank to keep interest rates unchanged for a while.
The Commerce Department said on Friday its personal consumption expenditures (PCE) price index rose 0.3% last month, after 0.2% in March. The annual increase in the PCE price index in March rose by 1.4% to 1.5%.
Without volatile food and energy sources, the PCE price index rose by 0.2% last month after rising by 0.1% in March. In the 12 months to April, the so-called core PCE price index rose by 1.6% after rising by 1.5% in March.
The core PCE index is the Fed’s preferred inflation measure. In March 2018, it reached the US Federal Reserve’s inflation target of 2% for the first time since April 2012.
Persistent hard inflation and slow economic growth have led to the Fed being called upon to cut interest rates, among other things by President Donald Trump. Fed Chairman Jerome Powell, has set the course for a temporary easing of monetary policy.”The Fed kept interest rates unchanged this month and signalled little propensity to adjust monetary policy soon.
A much weaker inflation impulse than initially assumed in the first quarter has led economists to moderate the annual core price index in April.
The government reported on Friday that consumer spending, which accounts for more than two-thirds of US economic activity, fell by 0.3% and 0.6% respectively.
Data for March have been revised to show that consumer spending increased by 1.1%, which is the largest increase since August 2009, rather than the previously reported 0.9% increase. Economists surveyed by Reuters expected an increase of 0.2 percent in April.
Adjusted for inflation, consumer spending remained unchanged in April. These so-called real consumer spending rose by 0.9 percent in March.
The weak real consumer spending in April indicates slower economic growth in the second quarter.
Consumer spending rose by 1.3 percent in the first quarter, the slowest in a year. The economy as a whole grew by 3.1 percent in the last quarter and was weakened by volatile exports, inventories and arms components. Growth estimates for the April-June quarter are below 2.0%.
Personal income rose by 0.5% in April after rising by 0.1% in March. Savings rose in April to $ 990.3 billion from $ 963.7 billion in March.