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A month ago, federal data showed relatively flat prices from February to March. Friday's fresh figures tell a different story.
This month’s personal consumption expenditures price index (PCE) suggests that inflation rose more sharply in April than in the preceding two months. The PCE increased 0.4% in April after rising 0.1% in March and 0.3% in February, according to a Bureau of Economic Analysis report released Friday.
The PCE measures consumer spending by tracking prices that U.S. consumers are currently paying for goods and services. The Bureau of Economic Analysis releases new PCE data on a monthly basis.
This month’s report found that:
Annually, the PCE price index rose 4.4% in April, compared to 4.2% in March.
On an annual basis, prices for goods increased 2.1% in April, while prices for services increased 5.5%. In March, on an annual basis, the prices of goods increased 1.6%, while prices for services swelled 5.5%.
Core PCE, which excludes food and energy, rose 0.4% from March to April after rising 0.3% from February to March.
The PCE price index, and specifically core PCE, is the Federal Reserve’s preferred measure of inflation. The Fed, aiming to tame inflation, meets on June 13 and 14 to decide whether or not to raise the federal funds rate for the 11th time since March 2022.
In that same week, we’ll see another new inflation metric. On June 13, new consumer price index data will be released. Among other differences between that index and PCE, the CPI data is published by the Bureau of Labor Statistics.
As for the PCE, it’s compiled by the Bureau of Economic Analysis, which uses data from businesses and manufacturers by way of the U.S. Census Bureau. In calculating the index, the Census Bureau estimates what goods and services were sold on a month-to-month basis through surveys, quarterly reports and economic census. It also factors in the GDP, or gross domestic product.