PCE Index, Fed’s Preferred Gauge Of Inflation, Dips To 2.1% In April, Core Reading Marks Smallest Rise In Over 4 Years

The Personal Consumption Expenditures (PCE) Index, which is the Federal Reserve’s preferred gauge of inflation, rose lower than expected as President Donald Trump’s tariff impacts have yet to reflect in price rises.

According to the Commerce Department, the PCE index rose just 0.1% in April, which took the annual inflation rate to 2.1%. According to a CNBC report, the monthly rate aligned with estimates while the annual rate fell short of the expected 2.2%.

Core inflation rose 0.1% during the month, with the annual rate at 2.5%, marking the smallest rise in over four years, according to Bloomberg. This compares with estimates of 0.1% and 2.6%, respectively, according to the report.

Consumer spending slowed in April, with just a 0.2% rise versus the 0.7% rate seen in March.

Personal income increased $210.1 billion, or 0.8% at a monthly rate, in April, according to estimates released by the U.S. Bureau of Economic Analysis. At the same time, disposable personal income rose $189.4 billion.

The BEA data showed that personal outlays increased by $48.6 billion in April. Personal savings were $1.12 trillion in the month, while the personal saving rate was 4.9%.

Although President Trump has been pressing for a rate cut at the earliest, the Fed has been adamant about its wait-and-watch approach.

On Thursday, Fed Chair Jerome Powell met with Trump at the White House to discuss economic developments, including growth, employment, and inflation.

Powell asserted that he and his colleagues on the Federal Open Market Committee (FOMC) would set policy to support maximum employment and stable prices and that those decisions would be based solely on “careful, objective, and non-political analysis.”

Meanwhile, benchmark U.S. indices appeared to be set for a weak opening on Friday. 

The SPDR S&P 500 ETF Trust (SPY), which tracks the S&P 500, traded 0.35% lower on Friday morning, while the Invesco QQQ Trust, Series 1 (QQQ), which tracks the Nasdaq Composite, was down 0.27%.

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