US inflation moved higher again in April. The Bureau of Economic Analysis said the PCE price index rose 3.8% year over year, up from 3.5% in March. Core PCE, which excludes food and energy, came in at 3.3% on an annual basis, broadly in line with expectations but still well above the Federal Reserve’s 2% long-run target.
On a monthly basis, headline PCE increased 0.4% after 0.7% in March, while core PCE rose 0.2%. The figures show that price pressure remains persistent. That leaves little support for aggressive expectations of near-term easing by the Fed.
Spending stayed firm while income lost momentum
Consumer demand did not cool much in April. Current-dollar personal consumption expenditures increased by $111.1 billion, or 0.5% from the previous month. Services spending rose by $67.2 billion and goods spending increased by $44.0 billion. After adjusting for inflation, real PCE still edged up 0.1%.
Income data looked much softer. Personal income was flat at 0.0% in April, and disposable personal income fell by $19.9 billion, a decline of 0.1%. The report said the end of the Farmers Bridge Assistance Program in mid-April reduced farm proprietors’ income, offsetting gains from private-sector wages and salaries.
Saving rate fell to 2.6%
The gap between weak income growth and steady spending showed up in household savings. The personal saving rate dropped to 2.6% in April, while total personal saving declined to $611.7 billion. Consumers are still spending, but a larger share of that activity is being supported by reduced savings rather than fresh income growth.
The month-to-month comparison adds to that picture. Personal income growth slowed from 0.5% in March to 0.0% in April. Personal consumption growth also cooled from 1.0% to 0.5%, though it remained positive. Real disposable personal income deteriorated from -0.2% in March to -0.5% in April, pointing to more pressure on purchasing power.
Fed may keep rates higher for longer
The April report presents a difficult mix for policymakers: sticky inflation and resilient demand. Based on the analysis cited in the source material, the data do not yet give the Fed enough confidence that inflation is moving steadily back to 2%. That is why expectations for a longer period of elevated rates are likely to remain in focus.
For crypto markets, US inflation and interest-rate expectations remain major macro inputs. A hotter year-over-year PCE reading can narrow room for easing bets and reshape how traders price upcoming Fed decisions across risk assets.