The Federal Reserve’s preferred gauge of underlying US inflation rose at a brisk pace in March, reinforcing concerns of persistent price pressures.

The so-called core personal consumption expenditures (PCE) price index, which strips out the volatile food and energy components, increased 0.3 per cent from the prior month, data out on Friday (Apr 26) showed. From a year ago, it advanced 2.8 per cent.

The overall PCE price measure also rose 0.3 per cent from February and 2.7 per cent from the prior year.

Inflation-adjusted consumer spending climbed a larger-than-forecast 0.5 per cent, the biggest gain this year.

Faster inflation in the first quarter, combined with steady household spending, will likely persuade Fed policymakers to refrain from lowering interest rates – if at all – until later this year. Officials meeting next week are expected to hold borrowing costs at a two-decade high.

Stock-index futures climbed, while Treasury yields fell as investors took relief from in-line monthly inflation data.

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Central bankers pay close attention to services inflation excluding housing and energy, which tends to be more sticky. That metric climbed 0.4 per cent from February, an acceleration from the prior month, according to the Bureau of Economic Analysis.

A robust labour market is the main reason why households have yet to hit the brakes on spending in the face of high interest rates and elevated prices. 

Inflation-adjusted outlays for merchandise increased 1.1 per cent last month, reflecting a second-straight month of solid spending on durable goods. Services spending, meanwhile, edged up 0.2 per cent. BLOOMBERG