MNI BRIEF: Pricing Power Becoming More Limited-Fed Beige Book
Fed report says economic activity and employment increased modestly in recent weeks.
U.S. consumers are becoming increasingly resistant to price increases, making it harder for businesses to pass on higher costs, according to the latest Federal Reserve Beige Book report released Wednesday.
The report said "economic activity increased slightly, on balance, since early January" but added that "consumer spending, particularly on retail goods, inched down in recent weeks. Several reports cited heightened price sensitivity by consumers and noted that households continued to trade down and to shift spending away from discretionary goods."
Employment rose at a slight to modest clip in most Fed districts, the central bank said.
"Price pressures persisted during the reporting period, but several Districts reported some degree of moderation in inflation. Businesses found it harder to pass through higher costs to their customers, who became increasingly sensitive to price changes," the Fed said.
Fed Chair Jerome Powell said in testimony Wednesday the central bank needs more confidence that inflation is heading sustainably down to its 2% target before embarking in interest rate cuts sometime later this year. (See MNI INTERVIEW: Fed Could Cut Fewer Than 3 Times In '24-Friedman)