(Reuters) Despite rising inflation, Americans were surprisingly generous in March. They increased their spending by 1.1% from the previous month, the US Commerce Department announced on Friday. Economists polled by Reuters had forecast growth of just 0.7%. In February there was a revised 0.6% increase. Consumers are the backbone of the American economy in their spending.
Americans’ personal income rose 0.5% month over month in March. Despite this growth, high inflation reduces their purchasing power. One measure of inflation, which the US Federal Reserve watches closely, looks at consumers’ personal spending. This does not include food and energy costs, which fluctuate significantly. This annual inflation (core personal consumption expenditures rate) fell slightly to 5.2% in March from a revised 5.3% in February.
In light of high inflation, the Fed, aiming for 2.0%, is likely to be on the cusp of its largest rate increase in more than 20 years. For the central bank meeting on Wednesday, experts expect a half-point increase on the new interest rate range from 0.75 to 1.00%. With a string of tightening measures this year, currency watchers around Federal Reserve Chairman Jerome Powell will likely try to put a stop to inflation.
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