A key inflation indicator rose 3.1% in April, faster than expected, as price pressures built in the rapidly expanding U.S. economy, the Commerce Department reported Friday.
The core personal consumption expenditures index was forecast to increase 2.9%. Federal Reserve officials consider the measure to be the best gauge for inflation, though they watch a number of metrics.
As part of its price stability mandate, the Fed considers 2% to be healthy, though it is committed to letting the level average higher than usual in the interest of promoting full employment.
The index captures price movements across a variety of goods and services and is generally considered a wider-ranging measure for inflation as it captures changes in consumer behavior and has a broader scope than the Labor Department’s Consumer Price Index.
Over the past month, core PCE rose 0.7 %, also quicker than the expected 0.6%.
That increase in inflation came with a sharp deceleration in personal income, which declined 13.1%. But that actually was less than the 14% estimate. Personal income had surged 20.9% in March following the latest round of government stimulus checks.
Even with the big decline in personal income, the savings rate remained elevated at 14.9%. Consumer spending rose 0.5%, in line with estimates.
This is breaking news. Please check back here for updates.
Become a smarter investor with CNBC Pro.
Get stock picks, analyst calls, exclusive interviews and access to CNBC TV.
Sign up to start a free trial today.