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Inflation continued to hit consumer wallets in April, likely keeping the Federal Reserve on the sidelines until the current wave subsides, fresh pricing data released Thursday showed.<\/p>\n
The personal consumption expenditures price index<\/a> increased a seasonally adjusted 0.4% for the month, putting the 12-month inflation rate at 3.8%, the Commerce Department reported. Economists surveyed by Dow Jones had been looking for respective readings of 0.5% and 3.8%.<\/p>\n Excluding food and energy, core prices rose 0.2% for the month and 3.3% for the year, against estimates of 0.3% and 3.3%.<\/p>\n While the annual rates were in line with forecasts, the soft monthly readings could provide some hope that the burst in prices over the previous month had begun to ease.<\/p>\n The Fed takes in a wide dashboard of indicators, but uses the PCE measures as its prime forecasting and policy tool. Officials generally consider core a better indicator of long-term inflation trends as it excludes the volatile gas and groceries components.<\/p>\n In other economic news Thursday, gross domestic product growth in the first quarter was less than expected. GDP accelerated at an annualized rate of just 1.6% for the period, according to a revised Commerce Department reading that was below the initial estimate of 2%. <\/p>\n The department said the initial reading was cut because of downward revisions to consumer spending and investment. The consensus was for GDP to hold at the earlier 2% estimate.<\/p>\n Also, initial jobless claims<\/a> for the week ended May 23 totaled a seasonally adjusted 215,000, up 5,000 from the prior period and slightly above the 213,000 forecast, according to the Labor Department. Finally, orders for long-lasting “durable” goods<\/a> such as aircraft, appliances and computers soared 7.9% in April, well ahead of the 3.5% estimate. However, excluding transportation, new orders were up 1.1%.<\/p>\n Despite the soft Q1 reading for GDP, the department reported that consumer spending increased 0.5% in April, meeting the forecast. Income, though, was flat, against the estimate for a 0.4% increase.<\/p>\n Stock market futures<\/a> held negative after the data but were off their lows. Treasury yields were slightly negative, primarily at the longer-duration end.<\/p>\n On the inflation front, goods prices jumped 0.7% in April, pushed again by gasoline, which surged 5.5%. Services prices rose 0.3%, which included a 0.6% acceleration in the housing and utilities category and a 0.5% increase in food services and accommodations.<\/p>\n Housing prices broadly increased 0.5%, the biggest monthly gain going back at least until January 2025. Services excluding food, energy and housing rose just 0.2% for the month.<\/p>\n The inflation readings could provide some encouragement that underlying pressures are easing a bit, though they likely won’t change market expectations.<\/p>\n Traders expect the Fed to stay on hold until at least late in 2026 and currently are pricing the likelihood that the central bank’s next move will be a rate increase, possibly in the early part of the next year.<\/p>\n Inflation had been ticking closer to the central bank’s 2% goal, but the Iran war and the impact from tariffs has derailed the Fed. Policymakers recently have been placing a greater emphasis on the inflation danger as signs increase that the labor market is stabilizing.<\/p>\n