WASHINGTON (Reuters] – U.S. consumer expenditure rose higher than expected in April. Annual inflation seemed to have peaked in April. This may help support economic growth in Q2 amid increasing fears of a recession.

According to the Commerce Department, consumer spending, which is responsible for over two-thirds U.S. economy activity, rose 0.9% in March. To show that outlays were racing at 1.4%, instead of 1.1% in March’s previous report, data was revised up.

Reuters polled economists to forecast 0.7% growth in consumer spending. Companies are scrambling for record numbers of jobs to support strong wage growth.

As it fights high inflation to bring it down to 2%, the Federal Reserve’s hawkish policy has fuelled fears of recession. This led to a sell-off in equities and a surge in U.S. Treasury yields as well as a dollar increase.

The Russian dragging war on Ukraine and China’s Zero COVID-19 policies have exacerbated fears of an economic recession. These have further complicated supply chains.

Since March, the U.S. central banking has increased its policy interest rates by 75 basis points. At its June and July meetings, the Fed will likely increase overnight rates by half of a percent.

The second quarter growth estimates are generally higher than a 2.0 annualized rate. Economy contracted 1.5% in January-March quarter. Record trade deficits and slow inventory accumulation weighed down the robust fourth-quarter pace.

Inflation increased in April but not to the same extent as recent months. After a 0.9% increase in March, the personal consumption expenditures price index (PCE), gained 0.2% in April. After jumping 6.6% in March, PCE’s price index has increased 6.3% over the past 12 months.

An increase in the PCE price index is slowing, as large gains from last year are being omitted.

The PCE price index rose 0.3% in April, excluding volatile energy and food components. It has risen by this margin for the past three months. Following a 5.2% increase in March, April’s so-called Core PCE Price Index saw a 4.9% rise in annualized prices. The annual core PCE price index increased 2.9% in April, after rising 5.2% in March. This marked the second consecutive month of a slowing rate.