Fed's Core PCE Climbs 0.1%, Income Surges 0.8%
The Fed's preferred Core PCE Price Index rose 0.1% in April, matching March's revised gain and consensus estimates, signaling that early-month tariffs had little impact on underlying inflation.
Excluding food and energy, core PCE climbed 2.5% year-over-yearalso in line with forecasts and down from a 2.7% pace in Marchwhile the headline PCE measure, which includes all items, increased 0.1% month-over-month and 2.1% annually. The data echo April's CPI report in showing muted tariff effects, as consumers shifted spending patterns rather than letting price spikes feed through to core inflation.
Personal income jumped 0.8%more than double the 0.3% consensuswhile personal consumption expenditures slowed to 0.2% growth, down from March's 0.7%. That divergence drove the personal saving rate up to 4.9%, its highest in seven months, underscoring that households are choosing to boost buffers rather than chase pre-tariff deals.
Investors should care because stable core inflation and a rising savings cushion give the Fed cover to maintain its wait-and-see stance, keeping rate-cut expectations modest despite healthy consumer balance sheets.
This article first appeared on GuruFocus.
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