Consumer Spending Flattened in March While Prices Continued to Rise

Consumer spending flattened in March while prices continued to rise.

The personal consumption expenditures (PCE) price index, excluding food and energy, rose 0.3% from the previous month and 4.6% from the same month last year, the Bureau of Economic Analysis (BEA) reported Friday (April 28).

At the same time, personal consumption expenditures in March were unchanged from where they were in February, according to the report.

Consumers spent more on services like housing, utilities and healthcare, but that was partly offset by their spending less on motor vehicles and parts, gasoline and other energy goods, the report said.

PYMNTS research has found that there are significant generational differences in how the rising cost of living impacts consumers’ financial lifestyles.

For example, while 60% of all U.S. consumers were living paycheck to paycheck in March, that share was higher among millennials, at 73%, and members of Generation Z, at 66%, according to “New Reality Check: The Paycheck-to-Paycheck Report: The Generational Deep Dive Edition,” a PYMNTS and LendingClub collaboration.

Bloomberg reported Friday that the rising prices, along with the increasing labor costs that have been seen for seven consecutive quarters, reinforce analysts’ expectations that Federal Reserve policymakers will raise the benchmark interest rate again when they meet next week.

“The data strongly support another 25-basis-point hike in the May 2-3 meeting, and may even persuade some Fed policymakers that rates are not yet at a sufficiently restrictive level,” Bloomberg Economics Chief U.S. Economist Anna Wong said in the report. “Our baseline is for the Fed to go on an extended pause after next week’s hike, but we now see a growing risk that they may need to do more.”

In other findings from Friday’s BEA report, personal income increased by 0.3% in March compared to February and disposable personal income (DPI) rose by 0.4%.

The rise in personal income was led by compensation, personal income receipts on assets and rental income. Within these categories, private wages, salaries and personal dividend incomes saw the biggest gains, according to the report.

These increases were partially offset by decreases in proprietors’ income and personal current transfer receipts. Here, the greatest drops were due to a decrease in farm income and the end of pandemic-related emergency benefits for the Supplemental Nutrition Assistance Program (SNAP).

For all PYMNTS retail coverage, subscribe to the daily Retail Newsletter.