A key U.S. inflation gauge rose 3.1% year over year, higher than expected
A key inflation indicator rose a faster-than-expected 3.1% in April as price pressures built in the rapidly expanding U.S. economy, the Commerce Department reported Friday.
The core personal consumption expenditures index was forecast to increase 2.9% after rising 1.9% in March. Federal Reserve officials consider the measure to be the best gauge for inflation, though they watch a number of metrics.
As part of its price stability mandate, the Fed considers 2% to be healthy, though it is committed to letting the level average higher than usual in the interest of promoting full employment.
The index captures price movements across a variety of goods and services and is generally considered a wider-ranging measure for inflation as it captures changes in consumer behavior and has a broader scope than the Labor Department's consumer price index. The CPI accelerated 4.2% in April.
"Inflation pressures might get worse before they get better," wrote Jefferies economist Aneta Markowska, who pointed out that declining retail inventories could push prices higher. She added that a transition in consumer spending from goods to services ultimately should pull inflation pressures lower.
