KEY POINTS

• The core personal consumption expenditures price index showed a 3.4% annual rate after rising 0.3% for the month. The core annual reading was the highest since October 2023.
• The Fed’s primary inflation gauge also showed an annual rate of 4.1%, the highest since April 2023.
• Even with the elevated inflation levels, consumer spending for the month came in stronger than expected. Personal consumption expenditures rose 0.7% for the month.
• Also, gross domestic product, the broadest measure of growth, rose at a seasonally adjusted annualized pace of 2.1% in the first quarter, up 0.5 percentage point from the prior reading.

The Federal Reserve’s primary price gauge rose at its highest level since 2023, reinforcing the central bank’s recent tough talk on inflation.

Excluding food and energy, the personal consumption expenditures price index showed a 3.4% annual rate after rising 0.3% for the month, both in line with the Dow Jones consensus. The annual core reading was the highest since October 2023.