fbpx
The annual Global Impact Conference 2022 brings together visionary business leaders to revolutionize educational systems and inspire collaborative actionRead more APO Group announces content partnership with Pan-African broadcaster VoxAfricaRead more MainOne, an Equinix Company’s MDXi Appolonia Achieves Tier III Constructed Facility certification (TCCF), Now Most Certified Data Center in GhanaRead more United Nations High Commissioner for Refugees (UNHCR) warns rising tide of hunger, insecurity, and underfunding worsening gender-based violence risksRead more The Royal Thai Embassy presents the cultures of Thailand at the Association of Southeast Asian Nations (ASEAN) Festival in KenyaRead more Climate change is the biggest global threat, young people in Africa and Europe tell European Investment Bank (EIB), Debating Africa and Debating EuropeRead more $2 million in prizes awarded at Conference of the Parties (COP27) to African youth-led businessesRead more Africa and Europe’s top business and public sector leaders gather to chart Africa’s economic rebirthRead more The Thai delegation’s active participation at the 145th Assembly of the Inter-Parliamentary Union (IPU) in KigaliRead more Canon shares winning image of its Redline Challenge competition 2022Read more

Americans pulled back on spending in February as inflation bit

show caption
US prices continued to rise in February, bolstering the case that the Federal Reserve will hike interest rates throughout 2022./AFP
Print Friendly and PDF

Apr 01, 2022 - 02:23 AM

WASHINGTON — US consumers spent less and saved more in February amid rising prices for a range of goods, even as their incomes continued to increase, government data showed Thursday.

The Commerce Department reported personal consumption expenditures (PCE) rose 0.2 percent last month, less than analysts had expected and much weaker than the upwardly revised 2.7 percent increase in January.

Incomes rose 0.5 percent, a figure in line with forecasts, as wages rose but prices ticked up 0.6 percent compared to January and 6.4 percent compared to February 2021, with costs for energy and food seeing big yearly gains.

PCE prices are the preferred inflation gauge of the Federal Reserve, and Lydia Boussour of Oxford Economics said the latest high reading confirms that central bankers are likely to raise interest rates repeatedly this year to bring price increases under control.

“US consumers will face hard choices in the coming months as surging prices of non-discretionary items such as food, energy, and shelter pressure their budgets and lead them to pare back some purchases and dip into their savings,” she said.

Boussour added that rising wages, low unemployment and built up savings could offset some of the hit.

Spending rose $34.9 billion overall, the data said, with consumers channeling more of their dollars towards services like hotels and restaurants, and less towards goods such as automobiles, which are in short supply as manufacturers struggle to find semiconductors.

Food prices were up eight percent compared to the same month last year, while energy prices had climbed 25.7 percent. With those categories excluded, PCE prices were up 5.4 percent compared to February 2021, still higher than the month before.

When adjusted for inflation, both disposable income and spending decreased by less than half a percentage point last month, the data said.

The report contained evidence that more Americans are holding on to their money amid the inflation wave, as the personal savings rate ticked up to 6.3 percent with $1.15 trillion in the bank.

Most of the increase in income was from wages and benefits, which was offset by decreases in government aid programs, according to the report.

MAORANDCITIES.COM uses both Facebook and Disqus comment systems to make it easier for you to contribute. We encourage all readers to share their views on our articles and blog posts. All comments should be relevant to the topic. By posting, you agree to our Privacy Policy. We are committed to maintaining a lively but civil forum for discussion, so we ask you to avoid personal attacks, name-calling, foul language or other inappropriate behavior. Please keep your comments relevant and respectful. By leaving the ‘Post to Facebook’ box selected – when using Facebook comment system – your comment will be published to your Facebook profile in addition to the space below. If you encounter a comment that is abusive, click the “X” in the upper right corner of the Facebook comment box to report spam or abuse. You can also email us.