The Personal Consumption Expenditures price index, a key measure of inflation, rose 0.6 percent in April, according to Commerce Department data released Friday, higher than the already-inflated 0.5 percent expectations among economists.
A “core” version of the measure that excludes volatile food and energy prices came in even higher, at 0.7 percent.
In year-over-year terms, the index was up 3.1 percent, more than the 2.9 percent economists had expected. That figure was the highest in 13 years but was also distorted because it was set in comparison to last year when the economy was reeling from the COVID-19 pandemic.
The increase will add fuel to Republican arguments that President Biden’s $1.9 trillion COVID-19 relief bill overstimulated the economy.
Both the Biden administration and Federal Reserve Chairman Jerome Powell have argued that the spike in prices is likely to be temporary, and not a sign of newly entrenched inflation.
“My judgment right now is that the recent inflation that we have seen will be temporary. It’s not something that’s endemic,” Treasury Secretary Janet Yellen, herself a former Fed chair, said at a hearing Thursday.
“I expect it to last, however, for several more months, and to see high annual rates of inflation through the end of this year.”
Stock futures changed little following the release of the data, which also showed personal income falling 13.1 percent, as stimulus checks from the relief bill petered out. That figure was still better than the 14 percent economists expected.
The stimulus checks helped fuel a stunning 20.9 percent increase in personal income in March.
The data showed signs of a reawakening economy. As vaccination levels increased and COVID-19 cases dropped, people flocked back to bars, restaurants and recreational activities, which represented the largest drivers of service spending.
At the same time, the biggest drop in goods consumption came from food and beverage, as people’s newfound habits of eating and drinking out led them to rely less on groceries.