The PCE report for April 2024 is expected to show slight relief from increasing price pressures. The PCE Price Index April 2024 may support the central bankers’ cautious approach to interest-rate cuts.
What is the PCE Report for April 2024
Prices of goods and services go up and down over time, as do economic trends. The PCE price index measures inflation in the US by tracking changes in household living costs. It monitors the prices of various goods and services based on how much the average household spends monthly.
The US measures inflation in three main ways: the PCE price index, the consumer price index (CPI), and the producer price index (PPI). The PCE report for April 2024 is especially important because it is the Federal Reserve’s preferred gauge for US prices.
Additionally, the data for the PCE price index April 2024 comes from business surveys. It also comes from consumer spending reports. This makes sure that the PCE report for April 2024 includes expenses paid by others for consumers, like employer health insurance or government support.
The items in the basket for the PCE report are regularly updated to show changing spending habits. So, if prices rise, for one thing, people might buy cheaper alternatives, and the index might show these changes.
Economists expect the core PCE report for April 2024, excluding food and energy, to increase by 0.2% in April. This is the smallest increase this year. The overall PCE price index for April 2024 is supposed to increase by 0.3% for the third consecutive month.
Fed Chair Jerome Powell and his colleagues want more proof that inflation is moving towards its 2% target before lowering the interest rate, which has been at a 20-year high since July. The PCE report for April 2024 is expected to increase by 2.7% annually, and the core index is projected at 2.8%.
Earlier this month, officials agreed to keep interest rates high for longer. According to meeting minutes, many questioned whether the current policy was strict enough to lower inflation to their target. The latest inflation numbers will come with personal spending and income figures. While demand grew well in the first quarter, the data will provide insight into services spending after flat retail sales in April.
What the Economists Are Saying
Anna Wong, Stuart Paul, Eliza Winger, and Estelle Ou said that the report will likely show some signs that the disinflation process has not completely stalled. With slowing income growth in a cooling labor market, consumers gradually spend less. This should continue to reduce inflation this year. However, due to ongoing price pressures, inflation will only gradually decrease.
Other data set to be released this week include the revised first-quarter GDP on Thursday, which is expected to show slower growth. The Fed will release its Beige Book summary of economic conditions on Wednesday. Central bankers John Williams, Lisa Cook, Neel Kashkari, and Lorie Logan are scheduled to speak during the holiday-shortened week.
Nationwide’s senior economist Ben Ayers told CNN that the economy is moving in the wrong direction on inflation again. He added that service price increases do not disappear quickly, which worries them and the Fed. He added that this suggests higher inflation will stay longer this year than expected.
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