U.S. inflation remains above Fed's target rate

April 28 (UPI) -- Inflationary strains on the U.S. economy eased somewhat in March, though it remains above the 2% target rate for the Federal Reserve, the Commerce Department reported Friday.

The new data show personal income levels increased by 0.3% from February to reach $67.9 billion, suggesting wage growth remains resilient against lingering inflationary strains.

Those strains, however, are easing. Total personal consumption expenditures, a spending metric that serves also as the Federal Reserve's preferred measure of inflation, was 4.2% annually to March, lower than the 5.1% level for the 12-month period to February.

Stripping out more volatile items such as food and energy, however, and prices barely moved. Those prices increased by 4.6% over the 12-month period to March, near the level that's existed since at least November.

Month-on-month and consumer prices, barring food and energy, were unchanged from February.

Coupled with a resilient labor market, recent data suggest the U.S. Federal Reserve has more work to do to tame the economy. The U.S. economy expanded by a paltry 1.1% during the first quarter, compared to a 2.6% growth rate over the three-month period ending in December.

Personal savings, however, increased from $758.8 billion for the fourth quarter to $946.2 billion over the three months ending in March, suggesting consumers remain unfazed by higher prices and higher lending rates.

"The consumer is still in too good of shape for the recession to start in the second quarter," said Edward Moya, a senior market analyst at New York brokerage OANDA.

That sentiment supports the assumption that the U.S. Federal Reserve will enforce another rate hike when it meets next week.

"The Fed will be able to move forward with one, perhaps two more rate hikes, but then that should be it," Moya said.