US inflation rises to 3-year high, spending picks up
The numbers are likely to keep pressure on the Federal Reserve to raise interest rates this year
US consumer spending accelerated in May even as prices rose at the fastest pace in more than three years, suggesting Americans are powering through the fallout from the Iran war.
The personal consumption expenditures price index rose 4.1 per cent last month from a year earlier, the most since April 2023, Bureau of Economic Analysis data out on Thursday showed. Excluding food and energy, prices were up 3.4 per cent from a year earlier.
Inflation-adjusted consumer spending rose 0.3 per cent from a month earlier after stalling in April.
The numbers are likely to keep pressure on the Federal Reserve to raise interest rates this year.
Despite the recent peace negotiations between the US and Iran that have sent oil prices tumbling, economists expect the costs of an array of products to continue rising as the initial energy shock works its way through supply chains.
Looking ahead, the recent pullback in petrol prices could offer consumers some reprieve, though prices at the pump are still almost US$1 a gallon higher on average than before the war started.