UPDATE - US Fed's preferred inflation indicator monthly softens to 0.2% in April

UPDATES WITH ADDITIONAL FIGURES

By Ovunc Kutlu

ISTANBUL (AA) - The US Federal Reserve's preferred inflation indicator softened in April on a monthly basis, according to Commerce Department figures released Friday.

The core personal consumption expenditures (PCE) price index monthly rose 0.2% in April, down from the 0.3% month-on-month gain in March, and came below the market expectations of a 0.3% increase.

On an annual basis, the core PCE price index 2.8% in April, following a 2.8% year-on-year increase in March, and came in line with market estimates.

The PCE price index, which includes food and energy prices, annually rose 2.7% in April, after a 2.7% annual gain in March, coming in line with market expectations.

That index, on a monthly basis, rose 0.3% in April, following a 0.3% month-on-month increase in March, also coming in line with estimates.

The Fed has made a total of 11 interest rate increases between March 2022 and July 2023 to tame the record inflation, carrying the federal funds rate to the 5.25%-5.5% target range – the highest in 22 years.

The central bank skipped four rate hikes last year, and three more this year, while its first rate cut is widely expected to happen in the second half of this year.

The Commerce Department's Bureau of Economic Analysis said prices for goods increased 0.2% in April, compared to the previous month, and prices for services rose 0.3%.

"Food prices decreased 0.2 percent and energy prices increased 1.2 percent," it said in a statement.

Annually, prices for goods rose 0.1% in April, from the same month of last year, while prices for services jumped 3.9% year-on-year.

"Food prices increased 1.3 percent and energy prices increased 3.0 percent," on an annual basis, it added.

That was a 0.1% decrease in real PCE during the month of April, which reflected a 0.4% decline in spending on goods and a gain of 0.1% in spending on services, the agency noted.

"Within goods, the largest contributors to the decrease were gasoline and other energy goods, led by motor vehicle fuels, lubricants, and fluids, recreational goods and vehicles, and other nondurable goods, led by recreational items," said the statement.

"Within services, the largest contributor to the increase was health care, led by outpatient services," it added.