Prices continued to rise gradually. The Consumer Discretionary Price Index (PCE) excluding the volatile food and energy components rose 0.2% for the third month in a row.
Thus, the so-called core PCE price index increased by 1.8 percent compared to the previous year. The core PCE index is the Federal Reserve's preferred inflation measure. The US Federal Reserve has an inflation target of 2 percent.
Economists predict that the annual Core PCE Price Index will miss the Fed's target over the coming months. The Fed is expected to raise interest rates next month. It raised borrowing costs in March and forecast at least two more interest rate hikes this year.
Moderate inflation also helped shore up consumer spending last month. Adjusted for inflation, consumer spending rose 0.4% in April after 0.5% in the previous month. This suggests an acceleration in consumer spending after rising at an annualized rate of 1
Solid consumer spending contributed to data on trade and industrial production with economic growth picking up in the second quarter. Estimates of gross domestic product for the period April to June are over 3.0 percent. The economy grew by 2.2 percent in the first quarter.
In April, personal income rose 0.3 percent, after rising 0.2 percent in March. Wages increased by 0.4 percent. Savings fell from $ 445.7 billion in March to $ 419.6 billion last month. The savings rate fell from 3.0 percent in March to 2.8 percent.