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Inflation Stays the Same

The Federal Reserve’s preferred measure of inflation held steady in April (Business Insider).

What’s going on: “The Personal Consumption Expenditure (PCE) price index—which tracks price pressures across a wide range of goods and services purchased by U.S. consumers—rose by 2.7% compared to April 2023.”

  • Personal income and personal spending growth rates declined in April, “indicating slowing consumer momentum.”

The details: The core PCE inflation rate—which excludes food and energy—stayed at 2.8% in April, in line with economist expectations.

  • Month to month, core PCE inflation moved up 0.2%, slowing from 0.3% in March but in keeping with forecasts.
  • Disposable personal income, or personal income excluding personal current taxes, inched up 0.2%, or $40.2 billion (Bureau of Economic Analysis).

Why it’s happening: “The increase in current-dollar personal income in April primarily reflected increases in compensation, personal income receipts on assets and government social benefits,” according to the BEA.

What it means: Though expected, “[t]his reading may not alleviate fears that policymakers could choose to maintain higher interest rates for an extended period to ensure a steady return to the 2% target.”

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