The first inflation report under new Fed chief Kevin Warsh shows prices at highest in nearly 3 years
CBS News • • business
Key Points:
- The personal consumption expenditures (PCE) price index rose at an annual rate of 3.8% in April, marking the highest inflation level in nearly three years and slightly below economists' forecast of 3.9%.
- Core PCE, which excludes energy and food prices, increased 3.3% annually in April, matching expectations, while energy costs and prices for housing, utilities, recreation, and food services saw significant jumps.
- Federal Reserve chief Kevin Warsh faces challenges as inflation rises amid geopolitical tensions impacting energy prices, with growing speculation of a potential interest rate hike later this year.
- Personal income growth slowed to 2.5%, lagging behind inflation, causing a loss in purchasing power for many households, while the personal savings rate dropped to 2.6%, indicating that consumers are increasingly drawing on savings to cover expenses.
- Consumer spending increased 0.5% in April, mostly driven by price increases rather than real growth, reflecting financial strain on households and contributing to historically low consumer confidence.