The April Personal Income and Outlays report from the U.S. Bureau of Economic Analysis showed that the headline personal consumption expenditures (PCE) price index rose by 3.8% year over year, slightly below expectations of 3.9% and up from March’s 3.5%. Core PCE inflation (excluding food and energy prices) increased 3.3% year over year, in line with expectations and above March’s 3.2%. Real personal consumption expenditures rose $111.1 billion and 0.5% month over month. The growth in expenditure was driven by increases of $67.2 billion in spending on services and $44.0 billion in spending on goods.
The ABA Office of the Chief Economist believes that the April data indicates inflationary pressures remain elevated and moving away from the Federal Reserve’s 2% target. Persistent price growth continues to pressure household balance sheets, increasing risks to credit performance for consumer loans, especially for lower income households.
