Fresh pricing data released Thursday showed inflation continued to burden consumers in April, keeping the Federal Reserve unlikely to adjust its policy stance until pressures ease.
The personal consumption expenditures price index increased a seasonally adjusted 0.4% for the month, putting the 12-month inflation rate at 3.8%, according to the Commerce Department.
Economists surveyed by Dow Jones had forecast respective monthly and annual readings of 0.5% and 3.8%, meaning the actual figures came in slightly softer than expected.
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% respectively.
While annual rates matched forecasts, the softer monthly readings offered some hope that the surge in prices recorded in the previous month had begun to ease.
The Federal Reserve uses the PCE measures as its primary forecasting and policy tool, with officials generally considering core inflation a better indicator of long-term trends due to its exclusion of volatile food and energy components.
In separate economic data released Thursday, gross domestic product grew at an annualized rate of just 1.6% in the first quarter, below the initial Commerce Department estimate of 2%.
The department attributed the downward revision to weaker consumer spending and investment figures, against a consensus expectation that growth would hold at the earlier 2% estimate.
Initial jobless claims for the week ended 23 May totalled a seasonally adjusted 215,000, up 5,000 from the prior period and slightly above the 213,000 forecast, according to the Labor Department.
Orders for durable goods such as aircraft, appliances and computers surged 7.9% in April, well ahead of the 3.5% estimate, though excluding transportation, new orders rose just 1.1%.
Consumer spending increased 0.5% in April, meeting forecasts, but income was flat against an estimate for a 0.4% increase, adding further complexity to the economic picture.
On the inflation front, goods prices jumped 0.7% in April, pushed by gasoline, which surged 5.5%, while services prices rose 0.3%, driven partly by a 0.6% acceleration in housing and utilities.
Housing prices broadly increased 0.5% in April, representing the biggest monthly gain going back at least until January 2025, according to the data.
Traders currently expect the Fed to stay on hold until at least late in 2026 and are pricing in the likelihood that the central bank’s next move will be a rate increase, possibly early the following year.
New Fed Chair Kevin Warsh has indicated he believes the central bank’s benchmark rate could be lowered, though he is likely to face opposition from the rest of the Federal Open Market Committee.