A key inflation measure reached a 40-year high for the year ending in March, according to data released by the Commerce Department. The Personal Consumption Expenditures price index, which is the Federal Reserve’s preferred method of measuring inflation, surged by 6.6%.
The increase was the result of a nearly 40% rise in energy costs during the first quarter. In addition, the cost of food was up by 9.2% over the same time.
The data does show signs that inflation may be slowing down. When the cost of energy and food, which are both extremely volatile, are stripped out, the PCE rose 5.2%, compared to a 5.3% increase in February. In addition, incomes increased by 0.5%, as did disposable income. Consumer spending was also up, rising by $185 billion.
The new data is unlikely to result in changes to the Federal Reserve’s plan to raise interest rates during its Federal Open Market Committee meeting next week. The Fed is expected to increase the interest rate by 50 base points as it tries to clamp down on inflation.