The annual inflation rate for the year ending in April climbed to 3.8%, up 0.4% on a month-to-month basis, the Commerce Department reported Thursday.

May 28 (UPI) -- The annual inflation rate for the year ending in April climbed to 3.8%, up 0.4% on a month-to-month basis, the Bureau of Economic Analysis reported Thursday.

Personal consumption expenditures, the Federal Reserve's favored economic measure of inflation, increased by 0.5% or $111.1 billion. The Commerce Department said the current-dollar increase reflected a $67.2 billion increase in spending on services and a $44 billion increase in spending on goods by consumers.

Personal income in the United States decreased by less than 0.1%, or about $100 million, in April. Disposable personal income also decreased about 0.1%, or $19.9 billion.

The personal saving rate, the disposable income consumers save after paying taxes, dropped to 2.6%, the lowest rate since June 2022.

Gas and energy spending again saw the greatest consumer spending increase, up $28.8 billion, followed by housing and utilities at $22.7 billion. Motor vehicles and parts, financial services and insurance, and clothing and footwear all reported decreases in spending.

The Dow Jones consensus estimate forecasted a 0.5% PCE increase in April and 3.8% for the year.

Thursday also marked the report on first quarter gross domestic product which was lower than expected. Gross domestic product increased at a 1.6% rate, falling below the 2% forecasted.

The Commerce Department revised the first quarter GDP down, noting downward revisions in consumer spending and investments.