The U.S. personal consumption expenditures (PCE) price index in April rose at the fastest pace in about three years. It appears to have been affected by the shock of high oil prices stemming from the U.S.-Iran war.
The PCE price index is an inflation gauge that reflects the prices of goods and services consumed by household. The Federal Reserve (Fed) also uses it as a benchmark when assessing whether it is achieving its monetary policy goal of a "2% inflation rate."
According to the U.S. Commerce Department on the 28th (local time), the PCE price index in April rose 3.8% from a year earlier. It was the biggest increase in 2 years and 11 months since May 2023 (4.0%). Month over month, it rose 0.4%.
The core PCE price index, which excludes energy and food, rose 3.3% from a year earlier. It was the highest since Oct. 2023. Month over month, it rose 0.2%.
Year-over-year increases for both the headline index and the core index matched the forecasts compiled by Dow Jones. However, the month-over-month increases for the headline and core indexes each fell 0.1 percentage point (p) short of expectations.
Meanwhile, the provisional growth rate of U.S. gross domestic product (GDP) for the first quarter was 1.6% on an annualized basis from the previous quarter. The figure was revised down 0.4 percentage point (p) from the advance estimate (2.0%) released in Apr. It also fell short of the 2.0% forecast compiled by Dow Jones. Downward revisions to private investment and personal consumption from the advance estimate appear to have dragged down overall growth.
In particular, it is interpreted that the period after the U.S.-Iran war that broke out on Feb. 28 was reflected in the first-quarter growth rate calculation period. When releasing GDP statistics, the United States, unlike Korea, annualizes quarter-over-quarter growth (seasonally adjusted).