Inflation in the U.S. accelerated by 0.3% in April, in line with expectations.

Over the 12 months through April, the PCE price index rose by 2.7%, following a 2.7% increase in March.

Written by: Ignacio Teson • Friday, May 31, 2024 • 1 min read

• Last updated: Friday, May 31, 2024

U.S. inflation followed a sideways trajectory in April, a worrying sign for the Federal Reserve suggesting that the high rate of price increases could last longer than expected and casting doubts on how soon interest rates can be cut.

The Personal Consumption Expenditures (PCE) price index increased by 0.3% last month, the Commerce Department’s Bureau of Economic Analysis reported on Friday, in line with the unrevised rise in March.

Over the 12 months through April, the PCE price index rose by 2.7%, following a 2.7% increase in March. Economists polled by Reuters had forecast a 0.3% monthly rise and a 2.7% year-on-year increase.

The PCE price index is one of the inflation measures tracked by the Federal Reserve to achieve its 2 percent target. Monthly inflation readings of 0.2% over time are needed for inflation to return to the target.

The Federal Reserve has kept its benchmark interest rate between 5.25% and 5.50% for the past 10 months and has seen three months of higher-than-expected inflation and labor market data from January to March, following more encouraging data in the fourth quarter of last year.

Earlier this month, however, April’s monthly data on job growth and the Consumer Price Index (CPI), another closely watched inflation indicator, appeared to offer some relief to the Federal Reserve. U.S. job growth was at its lowest level in six months, and the CPI increased less than expected.

The Federal Reserve has raised borrowing costs by 525 basis points since March 2022 in an effort to cool demand across the economy. Initially, financial markets expected the first rate cut to occur in March, but it was later postponed to June and now to September.

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ABOUT THE AUTHOR See More

Ignacio Teson

Economist and Financial Analyst

Ignacio Teson is an Economist and Financial Analyst. He has more than 7 years of experience in emerging markets. He worked as an analyst and market operator at brokerage firms in Argentina and Spain.