Key Points:

  • April's core PCE price index rose 2.8% year-over-year.

  • Goods and services prices boosted April's inflation.

  • Food prices fell and energy prices rose in April.

According to Barron's, US Core PCE in April gained 2.8% YoY, same as March. Monthly gain was 0.2%, lowest since Dec 2023. Services prices remain main inflation contributor.

April's US Core PCE Index Reveals 0.2% Monthly Gain, Goods Prices Stir

The Bureau of Economic Analysis has published data showing the core personal-consumption expenditures price index for April gained 2.8 percent on a year-over-year basis, meeting economists' expectations and holding unchanged from last month's gain.

Analysis of US Core PCE Price Index Changes

The monthly gain in the core PCE price index was 0.2 percent, the lowest monthly gain since December 2023. Excluding food and energy components, the core PCE price index rose slightly less than expected, but barely. The 0.24917 percent gain in April was a shade below the expected 0.255 percent gain.

Relative to March's 0.33416 percent gain in core PCE, the April gain of 0.24917 percent looks more dramatic. However, the year-over-year change in the core PCE price index was unchanged at 2.8 percent in both March and April.

Impact of Goods and Services Prices on Inflation

Goods prices were again an important contributor to inflation in April, after contributing little to price growth for six months.

The Federal Reserve's preferred inflation gauge, the personal-consumption expenditures price index, rose 0.3 percent in April. Goods prices rose 0.2 percent and services prices gained 0.3 percent to drive that increase.

Services prices remain the main contributor to inflation being higher than desired in the U.S. Goods prices, on the other hand, rose only a scant 0.1 percent. The core PCE price index, which excludes food and energy prices, rose 0.2 percent in April and 2.8 percent on a year-over-year basis.

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Market Reaction to Federal Reserve's Inflation Measure

Food prices dropped by 0.2 percent in April while energy prices climbed 1.2 percent. Food prices have risen 1.3 percent over the last year while energy prices are up 3 percent.

Stock futures improved after the release of the Federal Reserve's preferred inflation measure. Dow Jones Industrial Average futures, S&P 500 futures, and Nasdaq 100 futures all gained, recovering losses made prior to the report's release.

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