May 28, 2021 3:57 PM | By DPA
15 minutes. The price level in the United States (USA) experienced its highest year-on-year increase in almost 30 years in April, due to the general increase in the prices of goods and services. This was reported this Friday by the Office of Economic Analysis.
Specifically, the personal consumption price index (PCE) registered a year-on-year increase of 3.6% in the fourth month of the year, which is equivalent to 1.2 points above the increase observed in March. In addition, it is the largest increase in a month since November 2007.
For its part, the underlying PCE index, which excludes US food and energy prices from the calculation due to their higher volatility, observed a rise of 3.1% in April. This represents the largest increase in almost 30 years (July 1992).
In the US there are several statistics that measure the evolution of prices. The consumer price index (CPI), released by the Labor Department, was published in the middle of the month and registered an increase in April of 4.2%, while the underlying increase was 3%. However, the PCE index is the one chosen by the Federal Reserve (Fed) to measure the evolution of inflation.
Increase in inflation
Although in recent weeks many voices in the US warned about the increase in inflation, the Fed always attributed the price increases to transitory factors, thus avoiding any type of intervention to try to contain the escalation.
In any case, the Fed recently modified its monetary policy strategy. Because after the crisis there was a long period in which inflation was below 2%, the US central bank will allow this figure to exceed that threshold “modestly” for a short, but indeterminate time, as a compensation.
Unlike the European Central Bank (ECB), which only aims to maintain stable inflation, the Fed also has to stimulate job growth with its monetary policy. In April, the number of non-farm jobs in the US was 144.3 million, which implies that it is still 8.2 million below the number of employees registered before the pandemic.