Inflation in April remained at the same stubbornly high level as in March. That means costs continued to rise too fast for consumers, and the Federal Reserve has more work to do in its fight against rising prices.
The Personal Consumption Expenditures price index — a closely watched inflation gauge that the Fed uses for its 2% target — rose 0.3% from the month before, resulting in an annual rate of 2.7% that matched March’s gain, according to Commerce Department data.
Excluding the more volatile categories of food and energy, the core PCE price index slowed for the month, rising 0.2% as compared to a 0.3% gain in March. On an annual basis, the core PCE price index held steady at 2.8%.
Although Friday’s report served as yet another reminder that slowing down inflation is a bumpy process, the results weren’t a complete surprise. Economists, by and large, weren’t expecting much of a meaningful shift in the inflation gauges.
Forecasts called for the monthly and annual increases in the overall and core index to be unchanged from March, according to FactSet consensus estimates.
While the overall PCE price index is technically used as the Fed’s target rate, the core index has received more attention from Fed officials because it provides a clearer lens into how underlying inflation is behaving.
Consumer spending also cooled for the month, rising just 0.2% as compared to the 0.7% increase recorded for March. Disposable income gains retreated as well, ticking up by 0.2% versus 0.5% in March.
When taking inflation into account, both spending and disposable incomes fell for the month, dropping 0.1%.
The PCE indexes are part of the Personal Income and Outlays report, which provides one of the most comprehensive looks at shifts in prices, including how consumers respond to them and how much consumers are spending, earning and saving.
This story is developing and will be updated.
Read the full article here
