A key index of U.S. prices ticked higher in April as consumer spending rebounded, a sign that inflationary pressures in the economy remain high.
The index, which the Federal Reserve closely monitors, showed that prices rose 0.4% from March to April, much higher than the 0.1% increase the previous month. Measured year over year, prices were up 4.4% last month, up from 4.2% in March.
The year-over-year figure was down sharply from a peak of 7% last June yet remains far above the Fed’s 2% inflation target, and it surpassed the 4.2% figure in March.
Consumers kept spending last month despite the price rise: Their spending jumped 0.8% from March to April.
The Fed monitors the inflation gauge that was issued Friday, called the personal consumption expenditures price index, even more closely than it does the government’s better-known consumer price index. The government has reported that CPI rose 4.9% in April from 12 months earlier.
Since inflation began surging after the pandemic recession, the PCE index has tended to show lower inflation than CPI. In part, that was because rents, which were among the biggest inflation drivers, carry twice the weight in the CPI that they do in the PCE.
In addition, the PCE index seeks to account for changes in how people shop when inflation jumps. As a result, it can capture emerging trends — when, for example, consumers shift away from pricey national brands in favor of cheaper store brands.