The Federal Reserve's favorite inflation measure leveled off in April as Americans pulled back somewhat on spending, according to federal data released Friday.
According to the Ministry of Commerce's Personal Consumption Expenditure (PCE) price index, prices rose 0.3 percent in April and 2.7 percent over the past 12 months, the same as in March. Excluding food and energy prices, which are more volatile, monthly inflation fell slightly to 0.2 percent and annual inflation remained stable at 2.8 percent.
The slight decline in inflation came as consumer spending fell slightly last month. Personal consumption expenditure rose just 0.2 percent in April, after a 0.7 percent gain in March, but fell 0.1 percent when adjusted for inflation.
After falling rapidly in 2023, inflation has held steady for much of the year, even as major retailers announce price cuts and Americans cut back on spending. Although annual inflation is not far from the Fed's annual target of 2 percent, central bankers have postponed planned interest rate cuts in lieu of steady progress to lower prices.
The persistence of inflation is also one of the key political challenges for President Biden, who is struggling to sell his handling of the economy to voters despite record-breaking job growth and historically low unemployment since the COVID-19 pandemic .
Nearly three in five Americans said they think the U.S. is in a recession, even though the U.S. economy is nowhere near recession levels. The US economy grew at an annual rate of 1.3 percent in early 2024 and the unemployment rate was just 3.8 percent, in line with levels under former President Trump before the pandemic.
