Inflation, as measured by the Personal Consumption Expenditures (PCE) price index, remained relatively stable in April with a 0.2% increase on a monthly basis and a 2.7% rise on an annual basis according to data released by the Bureau of Economic Analysis.
The core PCE index, which excludes food and energy prices, also saw a modest increase of 0.2% month-over-month but remained steady at a 2.8% annual rate.
Personal income grew by 0.3% in April while disposable personal income rose by the same percentage to $20.8 trillion, leaving Americans with savings of $745 billion during the month.
Despite these figures, some economists and market analysts expressed caution about the inflation situation, emphasizing that more evidence is needed before making any conclusions about a potential trend reversal.
For instance, Dan North, senior economist for North America at Allianz Trade noted that core PCE has been trading in a range for five months now and called for more significant progress towards the Fed's 2% annual inflation target.
The April data also showed that consumers spent $20.1 trillion on personal consumption, up by 0.2% during the month, while spending on services like housing and health care increased but was offset by less spending on goods.
Investors reacted positively to the inflation news with futures tied to major stock averages rising and Treasury yields moving lower.
