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A shopper carries a Macy’s bag outside the company’s flagship store in New York’s Herald Square neighborhood on April 11.
CNN
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Inflation remained high last month, but that hasn’t stopped Americans from spending.
The Personal Consumption Expenditure Price Index, closely watched as the Federal Reserve’s favored inflation indicator, accelerated to 2.7% in the fiscal year that ended in March, according to data released Friday by the Commerce Department.
The rate was higher than economists expected for a 2.6% rise and above the 2.5% rate in February.
Commerce Department data shows prices for services, particularly housing, health care and transportation, are putting upward pressure on overall inflation.
“This is not the doctor’s order data for Fed officials looking for confidence that inflation is back on a downward trajectory,” Christopher Rapkey, chief economist at Forwardbonds, said in a note issued Friday.
Although many economists prefer to measure a country’s inflation level using the monthly consumer price index, the Fed bases its 2% inflation target on the overall PCE index.
On a monthly basis, prices rose 0.3%, unchanged from February’s pace.
Excluding energy and food prices (highly volatile categories), the “core” PCE index remained flat at 2.8%, its lowest level in three years.
Consumer spending remained strong, increasing 0.8%, matching the breakneck pace seen a month ago. Economists had expected a 0.5% increase, with some consumer withdrawal expected, according to FactSet estimates.
The report said that without accounting for inflation, spending, which drives the economy, still rose by 0.5%. Disposable personal income adjusted for inflation increased by 0.2%.
However, the share of savings in disposable income fell to 3.2%.
This story is in development and will be updated.
