Inflation remained very high last month, but it did not stop Americans from spending, as it was accelerating Price index for personal consumption — a closely watched measure of inflation favored by the Federal Reserve — rose to 2.7 percent for the year ended last March, according to data released Friday by the Commerce Department.
This rate was higher than economists had expected the index to rise to 2.6 percent.
On a monthly basis, prices rose 0.3 percent in March, unchanged from the pace seen in February.
“We’re moving in the wrong direction, again, on the inflation story,” Ben Ayers, chief economist at Nationwide, told CNN.
Inflation has slowed from the decades seen in the summer of 2022. However, the progress made last year did not continue into 2024. Although rising gas prices have to play their part, shelter and insulation is the biggest bogeyman for lowering inflation. service charges, as price increases tend to be more “sticky”.
“These increases in utility prices are not going to go away overnight, and I think that’s the worrying part for us as economists, but also for the Fed,” Ayers said what we thought. ».
The Fed is still in wait mode
While many economists prefer to measure the nation’s inflation rates using the monthly Consumer Price Index (which shows prices rising 3.5 percent annually through March), the Fed establishes the his 2 percent inflation target on the total index of personal consumption expenditures, in his assessment of monetary policy. , the Bank monitors… Federal Reserve Also closely watched are trends in core inflation – best seen through the “core” index of personal consumption expenditure (PCE) which strips out volatile food and energy prices.
The core personal consumption expenditure index in March settled monthly and annually, at 0.3 percent and 2.7 percent, respectively.
Although both indicators are well below where they were at their peak (7.1% PCE inflation in June 2022, and 5.6% core in February 2022), they are also still stuck above target 2 percent at the Fed, after… 11 rate hikes in two years The Fed is still on hold and looking at possible rate cuts this year.
Economists and analysts say the timing of those cuts has been delayed after a series of hot inflation reports in early 2024.
The Jerome Powell-led Federal Reserve holds a policy-making meeting next week, and central bankers are widely expected to stay the course and keep interest rates where they are until clearer progress is made. .
(CNN’s Alicia Wallace)
2024-04-26 18:13:19
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