WASHINGTON (Pakistan Point News / Sputnik - 25th June, 2021) The Personal Consumption Expenditure (PCE) index, the key US inflation gauge monitored by the Federal Reserve, increased in May for a third month in a row while personal income and consumer sentiment fell that month, data from the Commerce Department revealed on Friday.
The core PCE index increased by 0.5 percent in May and 3.4 percent from a year ago, the data showed. By contrast, the Commerce Department's Personal Income index contracted by 2 percent in May while the Consumer Sentiment survey by the University of Michigan slipped to 83.5 from a previous 83.8 points.
The Federal Reserve has said the overshoot in inflation is due to price pressures arising from bottlenecks in US supply chains struggling to cope with demand in an economy reopening after months of coronavirus pandemic-suppression.
The University of Michigan said the survey indicates that US consumers were getting more wary of spending.
"It is likely that consumers will not reduce their savings and wealth to pre-pandemic levels, but maintain a higher level of precautionary funds," University of Michigan said in a report accompanying the survey.
The economy expanded by an annual rate of 6.4 percent in the first quarter of this year after shrinking 3.5 percent for all of 2020 due to coronavirus-related lockdowns. The Federal Reserve has officially forecast a 6.5 percent growth for all of 2021.
