The Federal Reserve’s preferred gauge of inflation flatined in April as Americans pulled back slightly from spending, according to federal data released Friday.
Prices rose 0.3 percent in April and 2.7 percent over the past 12 months, according to the Commerce Department’s personal consumption expenditures (PCE) price index, the same as in March. Without food and energy prices, which are more volatile, monthly inflation dropped slightly to 0.2 percent and annual inflation remained steady at 2.8 percent.
The slight dip in inflation came as consumer spending dropped slightly last month. Personal consumption expenditures rose just 0.2 percent in April after a gain of 0.7 percent in March, but fell 0.1 percent when adjusted for inflation.
After falling rapidly in 2023, inflation has plateaued throughout much of the year, even as major retailers announce price cuts and Americans pull back on their spending. While the annual inflation rate is not far from the Fed’s annual target of 2 percent, central bankers have held off on planned interest rate cuts in lieu of steadier progress bringing prices down.
The stubbornness of inflation is also one of the main political challenges for President Biden, who is struggling to sell voters on his handling of the economy despite overseeing record-breaking job growth and historically low unemployment since the COVID-19 pandemic.
Nearly 3 in 5 Americans said they believe the US is in a recession, even though the American economy is nowhere close to recessionary levels. The US economy grew an annualized rate of 1.3 percent to start 2024 and the jobless rate was just 3.8 percent, in line with levels seen under former President Trump before the pandemic.