Inflation
rose
about
as
expected
in
April,
with
markets
on
edge
over
when
interest
rates
might
start
coming
down,
according
to
a
measure
released
Friday
that
is
followed
closely
by
the
Federal
Reserve.
The
personal
consumption
expenditures
price
index
excluding
food
and
energy
costs
increased
just
0.2%
for
the
period,
in
line
with
the
Dow
Jones
estimate,
the
Commerce
Department
reported.
On
an
annual
basis,
core
PCE
was
up
2.8%,
or
0.1
percentage
point
higher
than
the
estimate.
Including
the
volatile
food
and
energy
category,
PCE
inflation
was
at
2.7%
on
an
annual
basis
and
0.3%
from
a
month
ago.
Those
numbers
were
in
line
with
forecasts.
Fed
officials
prefer
the
PCE
reading
over
the
more
closely
followed
consumer
price
index,
which
the
Labor
Department
compiles.
The
Commerce
Department
measure
accounts
for
changes
in
consumer
behavior
such
as
substituting
less
expensive
items
for
costlier
alternatives,
and
has
a
wider
scope
than
the
CPI.
“The
core
index
came
in
at
2.8%.
That’s
fine,
but
it’s
been
trading
in
a
range
for
five
months
now,
and
that’s
pretty
sticky
to
me,”
said
Dan
North,
senior
economist
for
North
America
at
Allianz
Trade.
“If
I’m
[Fed
Chair
Jerome]
Powell,
I’d
like
to
see
that
start
moving
down,
and
it’s
barely
creeping.
…
I’m
not
reaching
for
the
Pepto
yet,
but
I’m
not
feeling
great.
This
is
not
what
you
want
to
see.”
A
1.2%
rise
in
energy
prices
helped
push
up
the
headline
increase.
Food
prices
posted
a
0.2%
decline
on
the
month.
Goods
prices
rose
0.2%
while
services
saw
a
0.3%
increase,
continuing
a
normalization
trend
for
an
economy
in
which
services
and
consumption
provide
much
of
the
fuel.
Along
with
the
inflation
reading,
Friday’s
release
included
data
about
income
and
spending.
Personal
income
increased
0.3%
on
the
month,
matching
the
estimate,
while
spending
rose
just
0.2%,
below
the
0.4%
estimate
and
off
March’s
downwardly
revised
0.7%.
Adjusted
for
inflation,
the
spending
numbers
showed
a
0.1%
decline,
due
in
large
part
to
a
0.4%
decrease
in
spending
on
goods
and
just
a
0.1%
rise
in
services
expenditures.
Market
reaction
following
the
release
saw
futures
tied
to
major
stock
averages
rising
while
Treasury
yields
moved
lower.
“The
PCE
Price
Index
didn’t
show
much
progress
on
inflation,
but
it
didn’t
show
any
backsliding,
either.
Based
on
the
initial
reaction
in
stock
index
futures,
the
market
will
see
it
mostly
as
a
positive,”
said
Chris
Larkin,
managing
director
of
trading
and
investing
for
E-Trade
from
Morgan
Stanley.
“Investors
will
have
to
remain
patient,
though,”
he
added.
“The
Fed
has
suggested
it
will
take
more
than
one
month
of
favorable
data
to
confirm
inflation
is
reliably
moving
lower
again,
so
there’s
still
no
reason
to
think
a
first
rate
cut
will
come
any
earlier
than
September.”
As
inflation
data
has
come
in
hotter
than
expected,
central
bank
officials
have
encouraged
a
cautious
approach.
That
means
less
likelihood
that
they
will
be
cutting
rates
anytime
soon.
Most
recently,
New
York
Fed
President
John
Williams
said
Thursday
that
while
he
is
confident
inflation
will
continue
to
recede,
prices
are
still
too
high
and
he
has
not
seen
sufficient
progress
on
moving
to
the
Fed’s
2%
annual
goal.
Markets
have
reined
in
their
expectations
for
rate
reductions
this
year.
Pricing
Friday
morning
indicated
a
probability
that
the
first
move
likely
won’t
come
until
November,
at
the
Fed’s
meeting
that
concludes
two
days
after
the
presidential
election.
