US March Income and Spending Rise, Inflationary Pressures Mount

US household incomes and spending both increased in March, fueling growing concerns over inflation. While the Personal Consumption Expenditures (PCE) price index excluding food and energy saw a slowdown in its rise, the overall PCE price index, including food and energy, increased more significantly, indicating a rise in overall price burdens.

According to the US Commerce Department on March 30 (local time), the core Personal Consumption Expenditures (PCE) price index rose 0.3% month-on-month. This was 0.1 percentage points lower than February's 0.4% and met market expectations of 0.3%.

The headline PCE price index, which includes food and energy, rose 0.7% month-on-month, an acceleration of 0.3 percentage points from February's 0.4%. On a year-on-year basis, the March headline PCE price index rose 3.5%, up 0.7 percentage points from 2.8% in February. The March core PCE price index rose 3.2% year-on-year, an increase of 0.2 percentage points from 3.0% in February.

Nominal personal consumption expenditures (PCE) for US households increased by 0.9% month-on-month in March, an expansion from 0.6% in February. Real PCE, adjusted for inflation, increased by 0.2% month-on-month.

US household personal income increased by 0.6% month-on-month in March, rebounding from a flat reading in February. Disposable personal income (DPI) also rose 0.6%, improving from flat in February. The Commerce Department attributed the increase in personal income primarily to compensation and farm proprietors' income. Within compensation, private sector wages and salaries drove the growth in personal income.

Personal current transfer receipts, including other government social security benefits, decreased. This was attributed to a reduction in estimated Affordable Care Act (ACA) enrollments. Real disposable income (Real DPI) decreased by 0.1% month-on-month in March, but the pace of decline was smaller than the 0.4% drop in February. The personal saving rate was recorded at 3.6%, down from 4.0% in February.