US inflation up in April, says Commerce Department
U.S. inflation picked up in April after a very weak start to the year, a development that could help to ease Federal Reserve officials’ recent concerns about tepid price pressures.
The Fed’s preferred inflation gauge, the price index for personal-consumption expenditures, rose a seasonally adjusted 0.31% in April from March and 1.51% from a year earlier, the Commerce Department said Friday.
Excluding volatile food and energy items, the so-called core PCE price index was up 0.25% from March—the fastest monthly pace since October 2016—and 1.57% from April 2018. Economist surveyed by The Wall Street Journal had expected core PCE prices to rise 0.2% on the month and 1.6% on the year.
The Commerce Department also revised down its inflation numbers for the first three months of the year. The PCE price index in March was up 1.44% from the year-ago month, down from a previous estimate of 1.49%.
Inflation remains well below the Fed’s 2% target, a level central bankers view as consistent with a solid economy. They worry a slower rate could be a sign of weak domestic demand.
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At a time of low unemployment and solid economic growth, Fed officials also fear that tepid price pressures could cause consumers and businesses to expect low inflation in the future, becoming a self-fulfilling prophecy that would make it harder to hit their target. Worse still, low inflation could give way to deflation—an economically dangerous fall in prices—during a recession.
Though the central bank is unlikely to give too much weight to one month of data, Friday’s numbers could help to reinforce Fed officials’ view that weak inflation at the beginning of 2019 would prove temporary. Prices for services, which account for the bulk of U.S. consumer spending and had posted an unusual decline in January, rose 0.37% in April, their biggest monthly jump since October 2014.