US inflation rises to 3.8% in April, highest level in nearly 3 years

Inflation in the United States reached its highest point in nearly three years in April, with the Personal Consumption Expenditures (PCE) price index climbing to 3.8% annually. This persistent price pressure highlights ongoing economic challenges in the world's largest economy, as reported by the US Bureau of Economic Analysis (BEA). The PCE price index, the Federal Reserve's key inflation gauge, saw a 0.4% increase from March to April. Core inflation, which excludes volatile food and energy prices, also rose, up 0.2% month-on-month and 3.3% year-on-year.

Despite a notable slowdown in personal income growth, with disposable personal income declining by $19.9 billion, Americans continued to spend. Consumer spending, measured by PCE, increased by $111.1 billion, or 0.5%, in April. This spending was distributed across both services ($67.2 billion) and goods ($44.0 billion). In real terms, adjusted for inflation, consumer spending grew by 0.1% for the month.

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The USD 111.1 billion increase in current-dollar PCE in April reflected increases of USD 67.2 billion in spending on services and USD 44.0 billion in spending on goods.

The BEA data indicated that spending was bolstered by categories such as gasoline, housing and utilities, recreation services, and food services. However, this continued spending occurred as the personal savings rate fell to a low of 2.6% of disposable income, amounting to $611.7 billion in April. The decline in farm proprietors' income, partly due to lower payments from the Farmer Bridge Assistance Program, was a significant factor in the overall income decrease, though this was partially offset by rising compensation, particularly in the private sector.

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The decrease in farm proprietors' income reflected a decrease in payments to farmers from the Farmer Bridge Assistance Program, which closed application submissions in mid-April.