Another key U.S. inflation gauge surges in April and hits 13-year high

The numbers: A key barometer of inflation leaped again in April and by one measure hit a 13-year high, reflecting a broad surge in consumer prices as the U.S. fully reopens and massive federal stimulus sloshes through the economy.

The so-called PCE index rose 0.6% in April to mark the fifth straight large increase. That matched the forecasast of economists polled by Dow Jones and The Wall Street Journal.

Rising inflation has spooked some on Wall Street and made Americans gnash their teeth when confronting higher prices for goods and services ranging from hamburgers and plywood to used cars and vacation rentals. It’s been a long time since they’ve experienced such a sharp upturn in prices in so short a time.

Read: Why aren’t Americans happier about the economy? They are paying higher prices for almost everything

Big picture: A debate is being waged on Wall Street and Washington: Is higher inflation here to stay?

Most economists say no. Much of the increase in prices lately is tied to the reopening economy as well as a huge dollops of federal stimulus. Americans have money to spend and they are eager to spend it on the things they could do or buy during the pandemic. That’s driving up prices.

Adding to the problem are ongoing shortages of key materials and supplies because of disruptions caused by the pandemic. That’s also causing prices to surge.

The Federal Reserve insists inflation will fade to its 2% target by next year once the economy is on firmer footing and the pandemic is in the rearview mirror.

So what’s the worry?

Some contend that if prices rise high enough for long enough that Americans will come to expect more inflation. That could cause erode worker wages, force the Fed to raise interest rates sooner than it plans and potentially short-circuit the economy.

Stay tuned. The debate is going take months if not years to play out.

Key details: The rate of inflation as measured by the PCE was fairly weak during the pandemic, with the yearly rate falling at one point to a five-year low of less than 0.5%.

Yet inflation began to rise again toward the end of last year and price increases accelerated in early 2021. They are likely to remain elevated for at least the next several months.

A separate measure of inflation that strips out food and energy, meanwhile, also rose by 0.7% last month.

The change in the so-called core rate increased to a yearly pace of 3.1% in April from 1.9% in March, marking the highest level since 1991

Read: The U.S. economy has suffered a few missteps. Just how bad is it?

Market reaction: The Dow Jones Industrial Average

and S&P 500

were set to open higher in Friday trades.

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