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yesterday

US Inflation Nears 2% Target as Tariff Impact Remains Elusive

The Federal Reserve is holding rates steady until tariff-driven price effects are reflected in economic data

FILE - The per-gallon price is illuminated on the pump at a Costco warehouse gasoline station Tuesday, April 1, 2025, in Thornton, Colo. (AP Photo/David Zalubowski, File)
People shop at a grocery store in Brooklyn on May 13 in New York City.
A shopper surveys goods on display in a Costco warehouse Wednesday, May 21, 2025, in Lone Tree, Colo. (AP Photo/David Zalubowski)

Overview

  • US PCE inflation rose 2.1% year-on-year in April, slowing from 2.3% in March and reaching its lowest rate since September 2024.
  • Core PCE inflation, which excludes food and energy, eased to 2.5%, falling short of economists’ forecasts and down from 2.6%.
  • Consumer spending grew just 0.2% in April after March’s 0.7% surge driven by front-loaded purchases ahead of tariffs.
  • The personal saving rate climbed to 4.9%, a near-yearly high, as personal income increased 0.8%.
  • Goods imports plunged by $68.4 billion in April, narrowing the merchandise trade deficit, while legal rulings have blocked then temporarily reinstated most of Trump’s tariffs.