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Consumer prices in the United States rose in April, which could corroborate the Federal Reserve's assertion that recent records of low inflation were transitory and allow the central bank to maintain inflation rates. Interest remained unchanged for some time.
The Commerce Department announced Friday that its personal consumption expenditure (PCE) price index rose 0.3% last month, following a 0.2% rise in March. The annual rise in the PCE price index rose from 1.4% in March to 1.5%.
Excluding volatile components of food and energy products, the PCE price index rose 0.2% last month, following a slight rise of 0.1% in March. In the last 12 months of April, the core PCE price index rose 1.6% after a 1.5% gain in March.
The basic PCE index is the measure of inflation favored by the Fed. It reached the 2% inflation target set by the US central bank in March 2018 for the first time since April 2012.
Persistent control of inflation and slowing economic growth have led to calls, including from President Donald Trump, for Fed rate cuts. Fed Chairman Jerome Powell has kept the reading soft "may end up being transitory". The Fed kept its rates unchanged this month and indicated its unwillingness to quickly adjust its monetary policy.
An inflationary impulse much lower than previously thought in the first quarter had led economists to anticipate a moderation in the ECP's annual base price index in April.
The government also announced Friday that consumer spending, which accounts for more than two-thirds of US economic activity, had risen 0.3% as consumers spend less on services, including domestic electricity and gas .
March data were revised upwards to indicate that consumer spending jumped 1.1%, the largest increase since August 2009, instead of the previously reported increase of 0.9%. Economists polled by Reuters predicted that consumer spending would rise 0.2% in April.
After adjusting for inflation, consumer spending was unchanged in April. Real consumer spending rose 0.9% in March.
The weakness in real consumer spending in April suggests a slowdown in economic growth in the second quarter.
Consumer spending rose 1.3% year-on-year in the first quarter, the lowest in the year. The economy as a whole recorded growth of 3.1% in the last quarter, weakened by the volatility of exports, stocks and defense. Growth estimates for the April-June quarter are below 2.0%.
Personal income rose 0.5% in April after rising 0.1% in March. Savings reached $ 990.3 billion in April, up from $ 963.7 billion in March.
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