US inflation rises to 3.8% in April, highest level in nearly 3 years
New Delhi, May 29
Inflation in the United States, measured by the Personal Consumption Expenditures price index, rose to 3.8 per cent in April compared with a year ago, marking its highest level in nearly three years and highlighting persistent price pressures in the world's largest economy, according to data released by the US Bureau of Economic Analysis
The PCE price index, which is the US Federal Reserve's primary measure of inflation, increased 0.4 per cent from the previous month and 3.8 per cent from a year earlier in April. Excluding food and energy prices, the core PCE price index rose 0.2 per cent month-on-month and 3.3 per cent year-on-year, the BEA said.
The inflation reading comes even as personal income growth remained weak. According to the data released, personal income was largely unchanged in April, while disposable personal income - personal income less personal current taxes - declined by USD 19.9 billion, or 0.1 per cent.
Despite softer income growth, Americans continued to spend.
The BEA said personal consumption expenditures (PCE), a measure of consumer spending, increased by USD 111.1 billion, or 0.5 per cent, in April.
"The USD 111.1 billion increase in current-dollar PCE in April reflected increases of USD 67.2 billion in spending on services and USD 44.0 billion in spending on goods," the U.S. Bureau of Economic Analysis said.
In real terms, after adjusting for inflation, consumer spending increased 0.1 per cent during the month.
The data showed spending growth was driven by categories such as gasoline and other energy goods, housing and utilities, recreation services, food services and accommodation, healthcare services and food and beverages.
The report indicated that consumers continued to spend even as their savings buffer weakened.
Personal savings stood at USD 611.7 billion in April, while the personal saving rate fell to 2.6 per cent of disposable income.
According to the BEA, the decline in personal income primarily reflected a fall in farm proprietors' income following lower payments under the Farmer Bridge Assistance Program.
"The decrease in farm proprietors' income reflected a decrease in payments to farmers from the Farmer Bridge Assistance Program, which closed application submissions in mid-April," the agency said.
The report noted that the weakness in farm income was partly offset by rising compensation, with growth led by private-sector wages and salaries.
The latest figures suggest that consumer demand in the United States remains resilient despite slower income growth, while inflation continues to remain well above the Federal Reserve's long-term target of 2 per cent.
— ANI
Reader Comments
I'm an expat here in India, but my savings are in USD. This inflation is eating into my purchasing power even while living here. The Fed needs to act decisively, but raising rates too much risk recession. Tricky situation.
This affects us more than people realize. US inflation means RBI has to be cautious about rate cuts. Our exporters might see some benefit though with a weaker dollar. Everything is connected in this global economy. 🌎
One thing that strikes me is how Americans keep spending even with weak income growth. Reminds me of our own consumption patterns during festive seasons. But saving rate dropping to 2.6% is alarming - that's almost nothing. Bache nahi rahe ab!
As someone working in finance, the core PCE at 3.3% is particularly concerning. That excludes volatile food and energy, so it's a truer picture of underlying inflation pressures. Fed has its work cut out.
I've been following this because my son studies in the US. His rent and food costs have gone up significantly. The student loan situation there is already bad, and now this. Makes me wonder if the American Dream is getting too expensive. 😔
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