Inflation remained stubbornly high in April, potentially boosting the chances that interest rates could stay higher for longer, according to a closely watched indicator released Friday by the Federal Reserve.
The personal consumption expenditures price index, which measures a variety of goods and services and adjusts for changes in consumer behavior, rose 0.4% in the month excluding food and energy costs, beating the Dow Jones estimate of 0.3%.
The gauge rose 4.7% year over year, 0.1 percentage point more than expected, the Commerce Department said.
Including food and energy, overall PCE also rose 0.4% and was 4.4% higher than a year ago, up from March’s 4.2% rate.
Despite the higher rate of inflation, consumer spending held up well and personal income increased.
The report showed spending jumped 0.8% for the month, while personal income accelerated 0.4%. Both numbers were expected to increase by 0.4%.
Price growth was almost evenly distributed, with goods increasing by 0.3% and services by 0.4%. Food prices fell by less than 0.1%, while energy prices rose by 0.7%. Year-over-year, goods prices rose 2.1% and services rose 5.5%, another sign that the U.S. is tilting back toward a service-oriented economy.
Food prices rose by 6.9% from the previous year, while energy prices fell by 6.3%.
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