U.S. core PCE inflation holds at 3.3% as April price pressures match forecasts

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US core PCE inflation April

Highlights

The personal consumption expenditures price index rises 0.4% in April, bringing annual inflation to 3.8%, matching expectations for yearly growth.
Core PCE inflation remains at 3.3% year-over-year in April, as monthly core prices increase 0.2%, both meeting or slightly underperforming forecasts.
First-quarter U.S. GDP growth is revised down to 1.6% annualized, while April consumer spending rises 0.5% and personal income remains flat.

April inflation and spending data

As reported by the Commerce Department, the personal consumption expenditures price index rises 0.4% in April on a seasonally adjusted basis, bringing the 12-month inflation rate to 3.8%. Economists surveyed by Dow Jones expect monthly and annual readings of 0.5% and 3.8%, respectively.

Excluding food and energy, core prices increase 0.2% for the month and 3.3% from a year earlier. Those figures compare with forecasts for 0.3% monthly growth and a 3.3% annual rate, leaving the yearly core reading in line with expectations.

The softer monthly inflation readings suggest the previous surge in prices may be starting to ease. Even so, the broader inflation trend continues to weigh on household budgets and keeps pressure on policymakers watching for clearer signs of disinflation.

Federal Reserve outlook and broader economic signals

The latest figures are likely to support expectations that the Federal Reserve remains on hold until the current inflation wave subsides further. With annual price growth still running above target, the data do not yet offer a strong case for an imminent policy shift.

Separate economic data released Thursday show first-quarter U.S. gross domestic product expands at an annualized rate of 1.6%, below the initial estimate of 2%. The Commerce Department says the revision reflects downward changes to consumer spending and investment.

Despite the weaker first-quarter GDP reading, consumer spending increases 0.5% in April, matching forecasts. Personal income is flat during the month, falling short of expectations for a 0.4% increase.

In our earlier article on Fed Vice Chair Philip Jefferson’s policy outlook, we covered his view that the current federal funds rate range leaves the central bank well positioned to respond as inflation risks remain tilted to the upside. He also pointed to a still-stable labor market while flagging emerging downside risks, and cited potential inflation pressures from energy disruptions and import-tax increases even as he expects some easing later in 2024.

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