Federal data released on Friday showed the Federal Reserve’s preferred inflation measure was flat in April as Americans cut back on spending a bit.
According to the Commerce Department’s personal consumption expenditures (PCE) price index, prices rose 0.3% in April and for the past 12 months, they were up 2.7%, the same as in March. Excluding more volatile food and energy prices, monthly inflation fell slightly to 0.2%, while annual inflation remained steady at 2.8%.
The slight drop in inflation was due to a slight decline in consumer spending last month. Personal consumption expenditures rose just 0.2% in April after increasing 0.7% in March, and were down 0.1% when adjusted for inflation.
After falling sharply in 2023, inflation has remained steady through the year, even as major retailers announced price cuts and Americans pulled back on spending. Annual inflation is not far from the Fed’s 2% annual target, but the central bank has held off on planned interest rate cuts in hopes of seeing prices steadily fall.
Persistent inflation is also one of the major political challenges for President Biden, who has struggled to convince voters of his handling of the economy even as he oversees record job gains and historically low unemployment since the COVID-19 pandemic began.
Nearly three in five Americans said they believe the U.S. is in a recession, even though the economy is nowhere near recessionary levels: The U.S. economy is projected to grow at an annualized rate of 1.3% by early 2024, with the unemployment rate at just 3.8%, the same as former President Trump’s pre-pandemic levels.
