He added: “It is critical that inflation moderate further, otherwise the Fed will continue to increase rates, which will ultimately undermine the economy and push it into recession.” “It is encouraging that the cost of housing services is moderating, reflecting weaker rents but health care inflation is picking up, reflecting a tight health care labor market and quickly rising labor costs.” “Inflation has peaked and is moderating, but it remains much too high,” said Mark Zandi, Moody’s Analytics chief economist, in an email to CNN. Household income ticked up to 0.4% from March the prior month, personal income grew 0.3%.Īs spending increased faster than incomes, the personal saving rate fell to 4.1% in April. Excluding the effects of inflation, real consumer spending increased 0.5%, reflecting a boost seen from new car purchases, according to the report. The PCE indexes are part of the Personal Income and Outlays report, which provides a more comprehensive look at shifts in prices, including how consumers respond to them and how much consumers are spending, bringing in and saving.Ĭonsumer spending jumped 0.8% in April from March, double what economists had expected. In March, the headline PCE index showed a 0.1% gain, while core accelerated by 0.3%.Įconomists polled by Refinitiv were expecting April’s monthly core price to increase 0.3%. On a monthly basis, the headline and core indexes were both up 0.4%. In March, the core PCE gauge grew by 4.6%.Įconomists had forecast that core PCE would hold steady at 4.6%, according to Refinitiv. The closely watched core PCE index - where volatile components of food and energy are excluded - unexpectedly ticked up: The Fed’s go-to gauge was up 4.7% for the year. Rising energy prices (up 0.7% month on month) helped push up the headline PCE index prices for goods and services increased 0.3% and 0.4%, respectively, while food prices showed a very slight decrease. The Personal Consumption Expenditures price index rose 4.4% for the 12 months ended in April, up from a 4.2% increase seen in March, according to data released Friday by the Commerce Department. The Federal Reserve’s preferred inflation gauge bounced higher in April, underscoring Fed Chair Jerome Powell’s warnings that reining in price hikes “is likely to be bumpy.” But with spending also heating up, Friday’s data from the Commerce Department kicked up the odds for further rate hikes. The US economy has encountered some expected turbulence on inflation’s descent.
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