Finance

A key U.S. inflation gauge rose 3.1% year over year, higher than expected

A key inflation indicator rose 3.1% in April, faster than expected, as price pressures built in the rapidly expanding U.S. economy, the Commerce Department reported Friday.

The core personal consumption expenditures index was forecast to increase 2.9%. Federal Reserve officials consider the measure to be the best gauge for inflation, though they watch a number of metrics.

As part of its price stability mandate, the Fed considers 2% to be healthy, though it is committed to letting the level average higher than usual in the interest of promoting full employment.

The index captures price movements across a variety of goods and services and is generally considered a wider-ranging measure for inflation as it captures changes in consumer behavior and has a broader scope than the Labor Department’s Consumer Price Index.

Over the past month, core PCE rose 0.7 %, also quicker than the expected 0.6%.

That increase in inflation came with a sharp deceleration in personal income, which declined 13.1%. But that actually was less than the 14% estimate.

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