American citizens increase consumer spending
Despite stubbornly high inflation, US consumers spent more in March than the previous month.
The personal consumption expenditures index rose 2.7% year-on-year in March, after 2.5% in February.
Photo: Eduardo Munoz Alvarez/AP Photo/Keystone
US consumers were quite willing to spend in March despite stubbornly high inflation rates. They increased their consumption by 0.8% compared to the previous month, the Ministry of Commerce announced on Friday. Economists polled by Reuters had expected growth of only 0.6%, after a 0.8% increase in February. Private consumption constitutes the cornerstone of the US economy, which led to a slowdown in its previously high growth rate at the beginning of the year.
GDP rose just 1.6% in the first quarter, after 3.4% in the last quarter of 2023. The central bank, which will decide the key interest rate again on Wednesday, wants to keep inflation tight to contain it without strangling the economy. He has been silent recently and left the key monetary policy interest rate in a range of 5.25 to 5.5%. Inflation, which remains well above the 2% inflation target, prevents a shift in interest rates for now.
The measure of inflation to which monetary authorities pay special attention is consumers' personal spending. The so-called personal consumption expenditures index rose 2.7% year-on-year in March, after 2.5% in February. Excluding volatile food and energy costs, the result is the core personal consumption expenditures index, which the Fed also watches closely – with annual inflation reaching 2.8% in March. Experts had expected a decline to 2.7%, after 2.8% in February. The data encouraged futures traders to believe that the first rate cut can be expected in September.
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Reuters
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