Inflation held steady at a 2.7% annual rate in April, as measured by the gauge favored by the Federal Reserve.
The new personal consumption expenditures price index numbers reported Friday morning by the Bureau of Economic Analysis were in line with forecasts.
The lack of downward progress in headline inflation is unwelcome news for President Joe Biden and the Federal Reserve, which has been seeking more evidence that its campaign to lower inflation by raising interest rates is working. The Fed’s target is 2% inflation in the PCE index.
From March to April, inflation rose 0.3%, in line with forecast expectations.
Core PCE inflation, a measure of inflation that strips out volatile energy and food prices, also held steady at a 2.8% year-over-year rate.
Inflation is running lower in the PCE index than in the consumer price index, which is the most closely watched inflation gauge. CPI inflation fell slightly to 3.4% for the year ending in April — a number still well above the 2% level that the Fed considers healthy.
In another sign of the stalling inflation and discontent with the economy, consumer sentiment fell in May to the lowest level in about five months, and expectations for inflation rose, according to the University of Michigan Consumer Sentiment Index.
But in some good news, the Conference Board’s gauge of consumer confidence ticked up in May after three straight declines.
The latest PCE numbers come a day after the most recent update to the first-quarter GDP numbers. The Bureau of Economic Analysis found that gross domestic product expanded at a 1.3% seasonally adjusted annual rate in the first quarter of this year, a downward revision of three-tenths of a percentage point.
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While economic growth remained positive in the first quarter, the slowdown is a notable drop from the preceding quarter, when GDP grew at a healthy 3.4% clip.
The labor market has also been another bright spot economically. The economy added 175,000 jobs in April, and the unemployment rate remained below 4%, a historically low level.