U.S. consumer spending picked up in March while the Federal Reserve’s preferred inflation gauge hit the central bank’s 2% target for the first time in a year, reinforcing the outlook for further interest-rate hikes.

Financial Adviser reported that purchases rose 0.4% from the prior month, matching estimates, after being little changed in February, Commerce Department figures showed Monday (April 30). The price gauge linked to consumption rose 2% from a year earlier after 1.7 percent in February; excluding food and energy, which officials see as a better gauge of underlying trends, it was up 1.9%.

The rise in consumer spending, which accounts for 70% of the economy, gives the economy some momentum at the end of an otherwise weak quarter, and provide some support for forecasts that consumption will accelerate this quarter as tax cuts and a gradual pickup in wages filter into Americans’ bank accounts and sentiment. At the same time, the income figures were slightly below forecasts, reflecting the weakest gain in wages and salaries since October.

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