WASHINGTON–After what many had assumed—or more likely, hoped—had been in peak in inflation earlier this year, the inflation measure most closely watched by the Fed ticked up again in April.
The new numbers show the difficult challenge that remains in front of the Fed as it seeks to tame rising rates while not tipping the economy too deeply into a recession.
According to the Commerce Department, the Personal Consumption Expenditures index climbed 4.4% in April versus one year earlier. That was a slight increase from March, when prices climbed 4.2% on an annual basis, but slower than the increase seen in February, when prices were up 5.1% on an annual basis.
‘Core’ Measure Rises
Meanwhile, the federal government’s “core” measure, which tries to gauge underlying inflation trends by stripping out volatile food and energy prices, rose 4.7% over the year through April, up slightly from 4.6% in March, according to the government.
The core measure rose 0.4% in April from the prior month, up from 0.3% in March, slightly faster than some analysts had expected. Core inflation had been rising at a faster pace earlier in the year, climbing 0.6 percent in January.
‘Recent Moderation,’ But…
“The data reflected the recent moderation in price gains compared with earlier months, but it also underscored how stubborn inflation has been,” the New York Times said in its analysis of the new numbers. “That could complicate the path for Fed officials, who began raising interest rates last year to cool the economy and slow price growth.”
Fed officials have also been monitoring consumer spending and Americans’ income, both of which rose in April, according to the report, the report added.
Consumer Spending is Up
In addition, the Commerce Department numbers show consumer spending increased 0.8% April.
Diane Swonk, the chief economist at KPMG, told the Times she expects Fed officials to have a “heated debate” over whether they should pause in June.