The personal consumption expenditures (PCE) price index, one of the Fed‘s preferred inflation gauges, rose a faster-than-expected 0.4% in April, commerce department figures showed on Friday. From a year ago, the measure climbed 4.4%.
Excluding food and energy, the so-called core PCE index increased 0.4% from the prior month and 4.7% from April 2022, also exceeding projections. Consumer spending, adjusted for prices, increased 0.5% after no change in March. The gain was the strongest since the start of the year and reflected pickups in both goods and services.
While inflation has moderated since peaking a year ago, resilient household demand risks keeping price pressures elevated. That’s the challenge facing Fed officials as they debate whether to pause their rate-hike campaign and assess implications of tighter policy on the banking system and economy more broadly.