The Federal Reserve’s preferred measure of inflation rose by slightly less than forecast in April.
The personal consumption expenditures price index moved up 0.4 percent last month compared with March, according to the Commerce Department’s Bureau of Economic Analysis. Economists had forecast the index would rise by 0.5 percent.
In March, the index jumped 0.7 percent. Compared with a year ago, PCE prices rose 3.8 percent. The Federal Reserve says it targets a two percent annual rise in PCE prices.
Excluding volatile food and energy prices, core PCE inflation climbed by 0.2 percent in April and 3.3 percent over the past year. Economists had forecast core prices to rise 0.3 percent, matching the March increase.
Goods prices rose by 0.7 percent, half of the March increase of 1.4 percent. Compared with a year ago, they are up 4.3 percent. Durable goods prices climbed 0.6 percent in April, with recreational goods prices rising 1.6 percent while prices of cars, household furnishings, and appliances fell. Durable goods prices are up 3.2 percent compared with a year earlier.
Prices for nondurables rose 0.8 percent, driven by a 5.5 percent increase in gasoline and other energy prices, and are up 4.9 percent for the year. The April increase in gasoline and energy prices followed March’s 20.9 percent increase, bringing the year-over-year increase to 28.9 percent. Clothing and footwear prices moved up sharply for the fifth straight month. These are now up 3.7 percent from a year ago. Food and beverage prices rose 0.5 percent after ticking down 0.1 percent in March. For the year, grocery prices are up 2.6 percent.
Services prices climbed 0.3 percent for the third consecutive month, bringing the year-over-year increase to 3.6 percent. Housing prices moved up 0.5 percent, the largest increase in over a year, for a year-over-year increase of 3.3 percent. Health care prices moved up just 0.1 percent in April and 2.9 percent from a year ago.
The personal consumption expenditures price index typically tracks the Labor Department’s consumer price index, the best-known measure of U.S. inflation. It measures prices across more of the economy, including many goods and services bought on behalf of consumers by employers and charities, while also adjusting more quickly when people change what they buy.
Consumer spending jumped 0.5 percent compared with the prior month, largely due to higher prices. After adjusting for inflation, consumer spending rose just 0.1 percent. Inflation-adjusted consumer spending on core goods fell 0.2 percent, and spending on services rose 0.3 percent.
Personal income was flat for the month and disposable or after-tax income fell 0.1 percent. After adjusting for inflation, disposable income fell 0.5 percent. This measure was dragged down by a fall in farm income, which the BEA said reflected lower payments from the Farmer Bridge Assistance Program, a one-time payment initiative meant to stabilize farm income during the transition to new farm bill provisions under the One Big Beautiful Bill Act.
Aggregate wages and salaries rose 0.24 percent in April and are up 3.53 percent from a year ago, putting them behind the broad measure of price increases. Private sector wages and salaries rose 0.25 percent and are up 3.86 percent from a year ago, in line with headline PCE inflation.
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