US inflation growth rate tempers Brent’s price gains

Inflation in the US, indicated by the change in Personal Consumption Expenditures (PCE) price index, remained elevated at 2.7% in April year-on-year, the US Bureau of Economic Analysis (BEA) reported.

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Brent’s price experienced downward pressure after the US PCE price index figures matched the increase seen in March. On a monthly basis, the PCE price index climbed by 0.3%, the US BEA reported. PCE or consumer spending, is a measure of the value of goods and services purchased by or on behalf of households.

This increase has raised doubts about how soon the US Federal Reserve (Fed) will start cutting interest rates and led analysts to project a decline in demand in the world’s largest oil-consuming nation.

“Growing investor worries that the US economy may continue to slow down while the Federal Reserve holds interest rates higher for longer in its fight against inflation have put a lid on risk appetite,” VANDA Insights’ founder and analyst Vandana Hari said. This has further “weighed on crude sentiment,” she added.

Higher interest rates in the US can dampen demand for dollar-denominated commodities like oil, as it strengthens the greenback against non-dollar currencies.

By Aparupa Mazumder 

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