A key index of US prices ticked higher in April as consumer spending picked up, a sign that inflationary pressures remain high in the economy.
index, which federal Reserve Closely-monitored data showed prices rose 0.4% from March to April, much higher than the previous month’s increase of 0.1%. Measured year-on-year, prices rose 4.4% last month, up from 4.2% in March.
The year-to-date figure was down sharply from a peak of 7% last June, yet well above the Fed’s 2% inflation target, and it surpassed the 4.2% mark in March.
consumers Continued to spend the previous month despite price increases: Their spending rose 0.8% from March to April.
The Fed tracks the inflation gauge it released Friday, called the personal consumption expenditure price index, even more closely than the government’s better known consumer price index. The government has informed about this CPI grew 4.9% in April compared to 12 months ago.
As inflation began to rise after the pandemic recession, the PCE index has tended to show less inflation than the CPI. In part, this was because rents, which were among the biggest inflation drivers, carry twice the weighting in the CPI that they do in the PCE. In addition, the PCE index seeks to account for changes in the way people shop when there is a spurt in inflation. As a result, it can capture emerging trends – for example, when consumers move away from pricey national brands in favor of cheaper store brands.