Breaking: US Core PCE Inflation Slows to 2.5% in April, Matches Forecast

US Core PCE Inflation Slows to 2.5% in April as Forecasted

Headline PCE Falls Below Expectations

The US Bureau of Economic Analysis (BEA) reported on Friday that the headline PCE Price Index—the Federal Reserve’s preferred inflation gauge—dropped to 2.1% year-over-year in April, from 2.3% in March. The figure came in below market expectations of 2.2%, indicating a further slowdown in consumer price pressures.

Core PCE Inflation Meets Forecasts

The Core PCE Price Index, which excludes food and energy, rose 2.5% YoY, easing from 2.7% in March and matching analyst expectations. On a monthly basis, both the headline and core PCE indexes rose 0.1%, indicating only modest price growth.

Income and Spending Metrics

• Personal Income: Increased by 0.8% MoM, showing strong wage and earnings growth.
• Personal Spending: Advanced by 0.2% MoM, slightly slower than expected.

Market Implications

This set of data supports the view that inflation is gradually cooling, which could bolster hopes for a Federal Reserve interest rate cut later in the year. While income growth remains strong, softer consumer spending suggests that households may be becoming more cautious.

Stay tuned to Tredu.com for more insights on the Federal Reserve’s next move, market reactions to inflation data, and the broader macroeconomic landscape.