The U.S. inflation gauge is expected to jump sharply in April

A measure of inflation closely followed by u Federal Reserve it is expected to publish its largest annual growth since the 1990s, which could fuel new concerns about price growth despite expectations of U.S. central bank officials that the increase will be temporary.

The Commerce Department’s personal consumption expenditure index, which eliminates volatile food and energy costs, is estimated to have increased by 2.9 percent last month compared to a year ago, according to a consensus forecast assembled by Refinitiv, a sharp increase compared to a 1.8 percent annual March growth rate.

On a monthly basis economists estimate that core PCE jumped 0.6 percent last month, compared to 0.4 percent in March.

This would bring the core PCE price index well above the Fed’s 2 percent target, to levels that have not been recorded since the 1990s.

An increase in the PCE price index may raised a new alarm about higher prices hindering the recovery of the US amid an explosion of demand as the pandemic subsides. Ma Fed officials they pointed out that they believe the factors driving change are mostly transient, such as heavy fiscal stimulus and supply chain extermination, and that inflation is likely to pick up later in the year.

Since last year the Fed has taken a more tolerant approach to it inflation, struggling to achieve moderately higher price increases compared to its target, to compensate for years of low inflation and push harder for full employment.

But U.S. central bank officials are also firm that they are ready to act if recorded inflation or inflation expectations seem to spiral out of control.

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