New economic data indicates that core inflation remained steady in April, with the Federal Reserve’s preferred price gauge, the personal consumption expenditures (PCE) index, rising 0.2% for the month. On an annual basis, core prices increased by 3.3%, aligning with previous forecasts. While headline inflation reached a 12-month high of 3.8%, the stability in core figures—which exclude volatile food and energy costs—suggests that underlying price pressures may be beginning to moderate.

The inflation report coincided with a downward revision to first-quarter economic growth. Revised figures show that gross domestic product (GDP) accelerated at an annualized rate of just 1.6%, falling short of the initial 2% estimate. This slowdown was attributed to lower-than-expected consumer spending and investment. Although consumer spending did rise by 0.5% in April, much of this activity appears to be driven by a decline in personal savings, which dropped to 2.6%, the lowest level since mid-2022.

Looking at specific sectors, gasoline prices surged by 5.5%, contributing to a 0.7% jump in overall goods prices. Meanwhile, services saw a modest increase of 0.3%, bolstered by rising costs in housing and utilities. Despite these fluctuations, durable goods orders saw a significant spike of 7.9%, far exceeding expectations. As the Federal Reserve evaluates these mixed signals, market analysts suggest the central bank may maintain its current interest rate stance until inflation trends more clearly toward its 2% target.