Latest data in the US point to the vitality of inflation pressures

The US Department of Commerce released personal income and consumption expenditure data for March.

Personal spending in the US remained flat in March. A 0.1 percent monthly decline in personal spending was expected.

Core price increases in the US continued to rise in March, reinforcing the scenario that the Fed will raise interest rates once again next week.

The personal consumption expenditures price index (core PCE), which excludes food and energy, which is one of the inflation indicators that the Fed monitors closely, recorded a monthly increase of 0.3 percent in March, while it increased by 4.6 percent annually. The overall PCE index rose 0.1 percent month-on-month.

The decrease in energy costs played a role in this increase. While a strong labor market and high savings offer households the ability to spend, household spending is losing momentum.

In addition, personal incomes in the country increased by 0.3 percent in March compared to the previous month. The expectation was for spending to increase by 0.2 percent.

Labor cost increased in the US

Labor costs in the US accelerated more than expected in the first quarter of the year, paving the way for a Fed rate hike.

The employment cost index rose 1.2 percent in the first quarter, according to data released by the US Department of Labor on Friday, which allows to monitor the general course of wages and personnel benefits.

With this increase due to personnel benefits, labor costs increased more than the previous quarter for the first time in the last year. The median expectation of economists surveyed by Bloomberg was 1.1 percent.

Labor costs have increased by more than 1 percent for seven quarters. This is the longest series going back to 1996. The data strengthened expectations for the Fed to raise rates once again next week.

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