April’s PCE price index rise exceeds March’s 3.5% gain, reinforcing Fed concerns over persistent inflation above its 2% target.
The Federal Reserve’s preferred inflation gauge, the personal consumption expenditures price index, climbed 3.8% year-over-year in April, the Commerce Department reported. The increase marks the highest annual reading since May 2023 and follows a 3.5% rise in March, driven by supply chain disruptions and higher energy costs linked to geopolitical tensions.
Core PCE, which strips out volatile food and energy prices, rose 3.3% in April, remaining well above the Fed’s 2% inflation target. Forecasters had anticipated a reading near 3.8%, aligning closely with the reported figure. The data arrives as the Fed weighs its next policy moves amid a resilient job market and persistent price pressures.
The Fed has held interest rates steady in 2026 after three cuts last year, reflecting concerns over inflation’s stubbornness. New Fed Chair Kevin Warsh, who previously advocated for lower borrowing costs, now faces a balancing act as economic growth and hiring show signs of strength.