Food inflation is the highest since 1981
Food inflation rose 10% in April, the highest level since 1981, according to a recent report from the Bureau of Economic Analysis.
The PCE index for food consumed outdoors increased 0.8% from March to April, according to a BEA report.
According to Forbes, the personal consumption expenditures index is the Fed’s preferred measure of inflation and helps the central bank make monetary policy decisions. Price data for the PCE index comes from surveys of companies, not from what consumers say they spend on goods and services.
Energy prices increased by 30.4% compared to April 2021. The report showed that compared to March, energy prices decreased by 3.5% in April.
May data has not been released.
The average price of a gallon of regular unleaded gasoline in the United States rose to $4.60 a gallon on Friday, according to the AAA.
With food and energy taken out of the equation, the report revealed that prices rose by 4.9% compared to April of last year. This number is down from 5.2% in March and 5.3% in February.
The core personal consumption expenditures index, which excludes food and energy, rose 0.3% from April to March of this year, the third consecutive increase of three-tenths of a percentage point.
In October, November and December last year, the core PCE index rose 0.5% month-on-month, and fell slightly in January this year to 0.4%, according to the report.
The drop in inflation from last year to this year partly reflects the very high level of inflation that hit more than a year ago, when inflation rose to a level not seen since the 2008 financial crisis.
According to the report, inflation as a measure of the personal consumption expenditures index rose by 6.3% in April compared to April 2021, although it increased by 6.6% from March 2021 to March of this year.
The PCE, used by the Commerce Department, is considered by Federal Reserve officials a more accurate measure of price stability than the more popular CPI used by the Labor Department. Federal Reserve officials use it when making inflation forecasts and their goal of average 2% inflation over time based on personal consumption expenditures (PCE) prices, according to Forbes.
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