US inflation rises to 3.8% in April, highest level in nearly 3 years

New Delhi: Inflation in the US, as measured by the Personal Consumption Expenditures (PCE) price index, rose to 3.8 per cent in April from a year ago, according to data released by the US Bureau of Economic Analysis (BEA); It reached the highest level in nearly three years, highlighting persistent price pressures in the world’s largest economy.

The PCE price index, the US Federal Reserve’s main inflation measure, increased by 0.4 percent in April compared to the previous month and 3.8 percent compared to the previous year. BEA stated that the core PCE price index, excluding food and energy prices, increased by 0.2 percent monthly and 3.3 percent annually.

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The inflation reading came even as personal income growth remained weak. According to the announced data, while personal income remained largely unchanged in April, disposable personal income (personal income minus current taxes) decreased by 19.9 billion US dollars, or 0.1 percent.

Even as income growth slowed, Americans continued to spend.

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Personal consumption expenditures (PCE), a measure of consumer spending, rose $111.1 billion, or 0.5 percent, in April, the BEA said.
“The $111.1 billion increase in PCE in current dollars in April reflects a $67.2 billion increase in services spending and a $44.0 billion increase in goods spending,” the U.S. Bureau of Economic Analysis said.Also Read: US and Iran find everything but what is needed

In real terms, after adjusting for inflation, consumer spending rose 0.1 percent for the month.

The data showed that the spending increase was driven by categories such as gasoline and other energy products, housing and utilities, entertainment services, food services and accommodations, healthcare and food and beverages.

The report showed that consumers continue to spend even as their savings buffers weaken.

While personal savings were at the level of 611.7 billion dollars in April, the personal savings rate decreased to 2.6 percent of disposable income.

According to the BEA, the decline in personal income primarily reflects a decline in farm owners’ income following lower payments under the Farmers’ Bridge Assistance Program.

“The decline in income for farm owners reflects a reduction in payments to farmers from the Farmers Bridge Assistance Program, which closed applications in mid-April,” the agency said.

The report said the weakness in farm income was partially offset by increased compensation and growth was driven by private sector wages and salaries.

Latest figures show that consumer demand in the US remains resilient despite slowing income growth, while inflation remains well above the Federal Reserve’s long-term target of 2 percent.