The Federal Reserve’s preferred inflation gauge failed to budge in April, the Bureau of Economic Analysis (BEA) announced in a report on Friday.
The personal consumption expenditures (PCE) price index grew by 0.3% in April, totaling 2.7% for the year, matching the increase seen in the previous month, according to the BEA. The PCE price index, excluding the volatile categories of food and energy, also remained the same from the previous month at 2.8% after rising 0.2% in April, far from the Fed’s annual goal rate of 2%. (RELATED: EXCLUSIVE: New Report Details Just How Much Regulations Under Biden Have Cost Average Americans)
President Joe Biden has repeatedly claimed that inflation is moving in the right direction, pointing to the decline that the inflation rate has seen since its peak in June 2022, despite resurging in recent months. The president has gone so far as to falsely claim that inflation was at 9% when he took office when it was really around 1.4%.
“The cost of living is still too high for too many working families, but today’s PCE report shows continued progress bringing down inflation,” National Economic Advisor Lael Brainard said in a statement following the BEA release. “Annual core inflation is at its lowest level since March 2021, and overall inflation is down 60% from its peak.”
Growth in the PCE price index, which the Fed looks at primarily in determining inflation trends to set monetary policy, has remained slightly lower than the more broadly watched consumer price index (CPI). Inflation through the CPI measured 3.4% in April year-over-year, rising in recent months from 3.1% in November amid a broader inflation surge.
Real PCE, which measures consumer spending less inflation, declined 0.1% in April due to a drop of 0.4% in spending on goods as Americans pulled back. Spending on services led by health care increased slightly by 0.1% in the month, partially counteracting other declines.
The newest inflation data comes one day after the BEA revised its economic growth estimate for the first quarter, lowering it from 1.6% to 1.3%, far lower than the 3.4% growth that was recorded in the previous quarter. Stubbornly high inflation and low growth have spurred fears that the U.S. is entering a period of stagflation, which wreaked havoc on Americans’ finances in the 1970’s and 1980’s.
PCE inflation for April 2024:
2.7% year-over-year
3.1% month-over-month (annualized)A new regime of 2.5%-3.0% inflation? pic.twitter.com/O8ezhJTS58
— David Andolfatto (@dandolfa) May 31, 2024
Fed Chair Jerome Powell pushed back against speculation of stagflation following the Fed’s May meeting, pointing to low unemployment and decelerating inflation. The unemployment rate ticked up slightly in April to 3.9%, while the economy added just 175,000 nonfarm payroll jobs, far fewer than the 303,000 that were announced for March.
Biden has sought to blame persistently high inflation on corporate greed, pointing to companies unnecessarily marking up profits as the reason for rising prices. The Federal Reserve of San Francisco disproved this claim by showing how corporate markups were similar during other periods of economic recovery, yet there were no inflation spikes.
The White House referred the Daily Caller News Foundation to Brainard’s statement.
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