ECONOMY

United States inflation gauge hits three-year high

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The United States Commerce Department reported Thursday that the Federal Reserve’s preferred inflation measure, the Personal Consumption Expenditures price index, rose 4.1 percent year-over-year, its highest level in three years and up from 3.8 percent the previous month. On a monthly basis, PCE increased 0.4 percent, matching the prior month but below an earlier 0.7 percent gain. Higher retail gasoline prices, driven by earlier disruptions near the Strait of Hormuz, and rising costs for specialized semiconductors and AI-related computer equipment were key contributors. Persistently elevated inflation has led the Federal Reserve to keep its benchmark interest rate unchanged this year, reversing January expectations for two cuts.

Prepared by Christopher Adams and reviewed by editorial team.

Timeline of Events

April 2023 PCE last reached comparable level
January Federal Reserve projected two rate cuts
Earlier this year PCE rose 0.7 percent monthly
Earlier this month United States, Iran sign peace
Earlier this month Strait of Hormuz disruptions ease
Thursday PCE inflation rises to 4.1 percent
Thursday national gasoline price averages $3.92
This year Federal Reserve holds benchmark rate

Why This Matters to You

Higher inflation means your dollar doesn't stretch as far. Gasoline and tech prices are up, impacting your daily commute and home office. Check your budget and consider ways to cut back on non-essential expenses.

The Bottom Line

Inflation is at a three-year high, largely due to global events and tech costs. The Federal Reserve is keeping interest rates steady, for now. Worth forwarding if you know someone who's feeling the pinch at the pump or on their tech purchases.