May 27, 2022 - Economy & Business

Key inflation measure stayed steep in April

Data: BEA; Chart: Axios Visuals
Data: BEA; Chart: Axios Visuals

The Federal Reserve's preferred gauge of inflation remained high in April, though the pace of price spikes showed signs of stabilizing, according to new government data released on Friday.

Why it matters: The personal consumption expenditures price index may be leveling off at a high level as the Fed moves aggressively to tamp down price spikes.

By the numbers: For the month, prices for goods and services Americans consume were up 0.2%. Excluding volatile food and energy costs, prices rose 0.3% — the same pace for the third month straight.

  • Prices rose 6.3% from a year ago, down from 6.6% in March, receding from a 40-year high.
  • Strip out volatile food and energy, and inflation rose 4.9% year-over-year (compared to 5.2% the prior month).

Details: Americans' spending is rising much faster than their incomes, plunging the savings rate.

  • The personal saving rate was 4.4% in April, down from 5% in March and the lowest since September 2008, the onset of the Global Financial Crisis.
  • It suggests Americans are spending down some of the extra savings accumulated during the pandemic, in part to keep up with high inflation.
  • Over the last two months, consumption spending rose by 2.3% (not adjusted for inflation), while disposable personal income rose only 0.7%.
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