The Federal Reserve’s preferred inflation measure showed minimal price increases in April, with the Personal Consumption Expenditures (PCE) index rising just 0.1% for the month.
This brought annual inflation down to 2.1%, the lowest reading of 2025 and very close to the Fed’s 2% target. Core inflation, which excludes volatile food and energy prices, also increased only 0.1% monthly, though it remains slightly higher at 2.5% annually.
Despite the positive inflation news, consumer behavior showed signs of caution. Spending growth slowed dramatically to just 0.2% in April (down from 0.7% in March), while Americans boosted their savings rate to 4.9% – the highest level in nearly a year. This suggests consumers may be preparing for potential economic uncertainty ahead.