Inflation Eats Up Income Gains in April
Rising prices offset the gains in personal incomes in April, the Commerce Department said Friday.
Personal incomes rose 0.5% in the month, but consumer prices also rose 0.5%. Real disposable incomes (inflation-adjusted and after-tax) fell 0.1%.
Real per-capita incomes fell 0.2%.
Consumer spending increased 0.6% in nominal terms. In real, inflation-adjusted terms, spending increased 0.1%, starting the second quarter off on a weak note.
Core inflation — as measured by the personal consumption expenditure price index, excluding food and energy — rose 0.2% in April, as expected, after a 0.3% gain in March. Core inflation rose 2.1% in the past 12 months, the fastest gain since March 2005.
The increase in the core PCE index was 0.2497%, which rounded down to 0.2%, barely.
With spending rising faster than incomes, the personal-savings rate fell to negative 1.6% in April from negative 1.4% in March. The savings rate has been negative for 11 consecutive months.