U.S. wages rise, putting Fed in trickier spot
STORY: The U.S. Federal Reserve’s goal of tamping down inflation just got a little trickier.
Data from the Labor Department on Friday showed that wage growth increased faster than expected in the first quarter.
That’s good news for employees struggling to keep up with elevated prices, but challenging for a central bank that’s been trying to wrestle inflation down to an annual rate of 2 percent.
It currently stands at 4.6%, according to March data out Friday from the Commerce Department.
That number, known as the core PCE - or personal consumption expenditures index, which excludes food and energy costs – was basically unchanged from the month before, a sign of how sticky inflation continues to be.
Together the results solidified the outlook that the Fed will raise its benchmark policy rate by another quarter percentage point at its meeting next week, and could, analysts said, push the bias towards even tougher monetary measures.
Meanwhile, U.S. consumer spending was unchanged in March.
Spending on services rose 0.4%, driven by housing and utilities as well as healthcare, but payments for goods fell 0.6% as purchases of motor vehicles, mostly new light trucks, decreased.
Lower gasoline prices also contributed to the decline in goods spending.