Core inflation steadies at 3.3% in April, matching forecasts

Core inflation, the Federal Reserve’s preferred gauge, posted a 3.3% annual increase in April, exactly in line with economists’ expectations [1]. The headline personal consumption expenditures (PCE) price index also rose to a 12‑month rate of 3.8%, the highest level since May 2023 [1].

Key takeaways

• Core PCE inflation was 0.2% month‑over‑month and 3.3% year‑over‑year, matching forecasts [1].
• Headline PCE inflation climbed 0.4% in April, putting the annual rate at 3.8%—the highest since May 2023 [1].
• Goods prices jumped 0.7% in April, driven largely by a 5.5% surge in gasoline, while services rose 0.3% [1].
• The Fed’s preferred inflation gauge remains a key guide for policy, with officials viewing core inflation as a better long‑term indicator [1].
• Recent economic data showed Q1 GDP growth slowing to 1.6% annualized and initial jobless claims edging higher to 215,000 [1].

Core and headline inflation trends

The Commerce Department reported that the personal consumption expenditures (PCE) price index increased 0.4% in April, lifting the 12‑month headline inflation rate to 3.8% [1]. Excluding the volatile food and energy components, core inflation rose 0.2% for the month and 3.3% over the year, exactly matching the Dow Jones survey median expectations of 0.3% and 3.3% [1]. The annual core rate marks the highest level since November 2023, while headline inflation’s 3.8% annual pace is the strongest since May 2023 [1].

Underlying price dynamics showed a mixed picture: goods prices surged 0.7% in April, largely propelled by a 5.5% jump in gasoline, whereas services prices increased 0.3%—including a 0.6% rise in housing and utilities and a 0.5% gain in food services and accommodations [1]. Housing prices themselves rose 0.5%, the biggest monthly gain recorded since at least January 2025 [1]. When stripped of food, energy, and housing, services inflation was modest at 0.2% for the month [1].

Broader economic backdrop and market expectations

April’s inflation data arrived alongside a weaker‑than‑expected first‑quarter GDP report, with the revised annualized growth rate falling to 1.6%—down from an initial 2% estimate [1]. The revision stemmed from lower consumer spending and investment figures, though consumer spending in April still rose 0.5% as forecast [1]. Income remained flat, and the personal savings rate slipped to 2.6%, its lowest level since June 2022 [1].

Labor market indicators showed a slight uptick in initial jobless claims, which rose to 215,000, modestly above the 213,000 forecast [1]. Durable‑goods orders jumped 7.9% in April, well ahead of expectations, though the gain was largely driven by transportation items; non‑transport durable orders rose only 1.1% [1].