U.S. Core PCE Price Inflation Remains Negligible in April; Real Spending Gain Dips but Income Surges

The PCE chain price index edged 0.1% higher in April after holding steady in March. The y/y rise edged down to 2.1% from a 2.3% in March, its slowest rise since September. The price index excluding food & energy also rose 0.1% for the second straight month, after a 0.5% February rise and a 0.3% January gain. Its y/y change fell to 2.5% last month from 2.7% in March, the slowest annual rise since March 2021.

Durable goods prices rose 0.5% (-0.3% y/y) in April, after easing 0.1% in March. Recreational goods & vehicle costs surged 1.5% (-1.7% y/y) after slipping 0.1% in March. Home furnishings & appliance prices increased 0.4% (-0.9% y/y) after no change in March. Motor vehicle & parts prices held steady (+0.6% y/y) following a 0.4% decline in March.

Prices of nondurable goods dipped 0.1% (-0.4% y/y) last month after falling 0.7% in March. Gasoline & oil prices held back the overall change and declined 0.3% (-13.1% y/y) after a 5.9% March decline. The cost of food & beverages also fell 0.3% (+1.9% y/y) after rising 0.5%. Clothing prices eased slightly (-1.0% y/y) after rising 0.3% in March.

Services prices inched 0.1% higher (3.3% y/y) in April, after rising 0.2% in March. Housing & utility prices rose 0.4% (4.4% y/y) after a 0.5% gain, and services prices excluding energy & healthcare eased slightly (+3.6% y/y) after a 0.2% rise. The cost of financial services & insurance weakened 1.1% (+4.5% y/y) after rising 0.2% in March. Recreation services costs fell 0.7% (+3.4% y/y) after a 0.4% March increase. Healthcare prices rose 0.3% (2.4% y/y) after a 0.2% gain. Transportation prices jumped 0.7% (3.1% y/y) after declining 0.3% in March, while hotel & restaurant prices rose 0.3% (3.0% y/y) following a 0.2% weakening.

Personal consumption expenditures (PCE) increased 0.2% (5.4% y/y) in April after a 0.7% rise in March. The gain matched expectations in the Action Economics Forecast Survey. When adjusted for price changes, PCE rose 0.1% in April (3.2% y/y) after increasing 0.7% in March.

Real spending on durable goods declined 0.8% (+6.8% y/y) in April, after a 3.8% March increase. Real spending on motor vehicles eased 0.6% (+9.8% y/y), after a 10.2% jump. Real outlays on furnishings & appliances eased 0.2% (+6.0% y/y) last month following a 0.9% rise. Real spending on recreational goods & vehicles weakened 1.9% (+6.3% y/y) last month, after rising 0.9% in March. Spending on “other” durable goods rose 0.5% (1.4% y/y) after declining 0.6% in March.

Nondurable goods spending in real terms edged 0.1% higher (3.2% y/y) in April following a 0.3% rise. Real clothing and footwear purchases fell 0.6% (+4.4% y/y) last month, following a 0.7% gain in March. Real food & beverage purchases improved 0.3% (1.7% y/y) and reversed the decline in the prior month. Real outlays on gasoline & other energy products increased 2.2% (3.0% y/y), after falling 1.4%. Real spending on “other” nondurable goods weakened 0.5% (+1.4% y/y) last month, following a 1.2% March rise.

Real spending on services gained 0.3% (2.7% y/y) last month, following a 0.4% March increase. Real spending on housing & utilities rose 0.2% (1.4% y/y) in April, after falling 0.2%, while real health care spending rose 0.3% (4.4% y/y) for the second straight month. Real spending on food services & accommodations increased 0.5% (2.4% y/y), after strengthening 2.1% during March. Real spending on financial services & insurance rose 0.8% (2.8% y/y) after rising 0.2%. Real spending on transportation services eased 0.1% (+3.4% y/y) in April, after edging 0.1% higher in March. Recreation spending improved 0.8% (2.4% y/y) after easing 0.1% in March. A 0.3% rise (4.0% y/y) in spending on “other” services followed a 0.8% improvement in March.

Personal income rose 0.8% (5.5% y/y) after gaining 0.7% in March. A 0.3% gain was expected. Wages & salaries rose 0.5% (4.6% y/y) for the third straight month. Rental income eased slightly (3.7% y/y), after rising 0.6% in March. Proprietors’ income moved 1.3% higher (5.6% y/y), following a 1.7% strengthening. Income from assets fell 0.4% (+1.9% y/y), after rising 0.3%, and current transfer receipts strengthened 2.8% (10.9% y/y) in April, the fourth straight month of strong increase. Government social benefits also rose 2.8% (11.1% y/y) in April, also the fourth consecutive month of strength.

Disposable personal income increased 0.8% (5.2% y/y) during April following a 0.7% March rise. After adjusting for price changes, disposable income rose 0.7% in April the same as in March. The y/y increase rose to 2.9%, up from a January low of 1.3%.

The personal saving rate rose to 4.9% in April, after easing to 4.3% in March. It was the highest rate since May of last year, up from a 3.5% December low. Personal saving rose 14.4% (1.7% y/y) in April, after improving 0.4% in March.

The personal income and consumption figures are available in Haver’s USECON database with detail in the USNA database. The Action Economics forecasts are in AS1REPNA.