The gas prices have rocketed to an average of $4.50 a gallon nationwide
One of the Federal Reserve’s preferred inflation gauges, the monthly Personal Consumption Expenditures (PCE) price index, rose to 3.8% in April from 3.5% in March.
The surge pushes inflation well above the Fed’s 2% target, prompting new Fed Chair Kevin Warsh to potentially consider interest rate hikes over cuts.
Furthermore, durable goods inflation hit 3.4%, exacerbated by tariffs and rising Chinese wholesale prices.
The gas prices have rocketed to an average of $4.50 a gallon nationwide, despite the Trump administration playing it off as a temporary hike. Fuel cost an average of $2.98 a gallon before the February 28 US and Israeli strikes on Iran.
Consequently, the personal savings rate cratered from 4.3% at the start of the year to 2.6% last month, marking its lowest level since June 2022.
Analysts note that people are being squeezed by inflation while their monthly incomes have remained flat. Personal income fell 0.1% in April, forcing Americans to dip into their finances.