WASHINGTON, D.C. – Economists are anticipating some relief from persistent price pressures as the Federal Reserve’s primary inflation measure is expected to show a slight decrease in April. The personal consumption expenditures price index, excluding food and energy, is predicted to rise by 0.2%, marking the smallest increase so far this year.
This development aligns with the caution exercised by central bankers in determining the timing of potential interest-rate adjustments. The Federal Reserve has emphasized the importance of obtaining more evidence to confirm that inflation is heading towards their 2% target before considering any changes to the benchmark interest rate, which has remained at a two-decade high since July.
The overall PCE price index is forecasted to have increased by 0.3% for the third consecutive month, underscoring the inconsistency in progress in the Fed’s battle against inflation. The annual rise in the PCE price measure is projected to be at 2.7%, while the core metric is expected at 2.8%, matching the prior month’s levels.
Recent discussions among Fed officials have leaned towards maintaining higher interest rates for a longer duration, with some questioning whether current policies are restrictive enough to bring inflation down to the desired target. The forthcoming inflation data will be accompanied by figures on personal spending and income, providing insight into services spending following reports of flat retail sales in April.
Economists suggest that consumers, facing slowing income growth in a cooling labor market, may gradually adjust their spending habits, thereby exerting a continued disinflationary influence throughout the year. Despite lingering price pressures, inflation is expected to decrease gradually in the upcoming months.
In addition to the inflation data, revised first-quarter gross domestic product figures are scheduled for release later in the week. The Federal Reserve will also issue its Beige Book summary of economic conditions around the country. Furthermore, central bankers in the U.S. and abroad will address various economic concerns and policy decisions in the coming days.
