world-economy

US Consumer Spending Gains Ground as Inflation Surges on Energy Costs

US consumer spending increased in April as annual inflation accelerated to its fastest pace since 2023, driven largely by energy price spikes tied to geopolitical tensions in the Iran region.

The PCE price index, the Federal Reserve's preferred inflation gauge, rose 3.8% annually in April. Core inflation, excluding volatile food and energy components, climbed to 3.3%, meeting economist expectations.

Consumer activity remained resilient despite mounting price pressures. The acceleration in inflation prompted central banks globally to reassess monetary policy. South Africa's central bank raised interest rates for the first time in three years as officials sought to contain inflationary momentum.

Regional variations emerged, with some emerging markets experiencing relief. Zambia reported inflation easing to an eight-year low in May, buoyed by currency strength and favorable agricultural conditions that offset international price shocks.