A key index of underlying inflation that is closely followed by the Federal Reserve remained elevated last month, keeping the Fed on track to raise interest rates next week for the 10th time since March of last year.
File - A potential buyer looks over an 2023 Cooper S sedan on the floor of a Mini dealership Friday, Feb. 17, 2023, in Highlands Ranch, Colo. On Friday, the Commerce Department issues its March report on consumer spending. – Key measures of prices and wages remained high in March, keeping the Federal Reserve on track to raise interest rates next weekAn index that is closely followed by the Fed, which excludes volatile food and energy costs to capture “core” inflation, rose 0.
Given the still-high levels of hiring and wage growth, economists expect the Fed to raise rates again next week and to keep them high through the end of the year. If, as expected, the Fed raises its benchmark rate next week by a quarter-point, it would reach 5.1%, the highest level in 17 years. Faced with high prices and interest rates, consumers have begun reining in their spending. Consumer spending was flat in March for a second straight month, the government reported Friday. Americans sharply cut their spending on autos, furniture and appliances, while continuing to spend on services, including household utilities, restaurant meals and hotel visits.
But many other services costs, which the Fed is also closely monitoring, remained high: Restaurant prices rose 0.6% last month. Hotel costs soared 3.1%. Child care costs jumped 1.4%.
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