Core inflation hit an annual rate of 3.3% in April, as expected, Fed’s preferred gauge shows

Inflation continued to hit consumer wallets in April, likely keeping the Federal Reserve on the sidelines until the current wave subsides, fresh pricing data released Thursday showed.

The personal consumption expenditures price index increased a seasonally adjusted 0.4% for the month, putting the 12-month inflation rate at 3.8%, the Commerce Department reported. Economists surveyed by Dow Jones had been looking for respective readings of 0.5% and 3.8%.

Excluding food and energy, core prices rose 0.2% for the month and 3.3% for the year, against estimates of 0.3% and 3.3%.

While the annual rates were in line with forecasts, the soft monthly readings could provide some hope that the burst in prices over the previous month had begun to ease.

In other economic news Thursday, gross domestic product growth in the first quarter was less than expected. GDP accelerated at an annualized rate of just 1.6% for the period, according to a revised Commerce Department reading that was below the initial estimate of 2%.

The department said the initial reading was cut because of downward revisions to consumer spending and investment. The consensus was for GDP to hold at the earlier 2% estimate.

Despite the soft Q1 reading for GDP, the department reported that consumer spending increased 0.5% in April, meeting the forecast. Income, though, was flat, against the estimate for a 0.4% increase.

On the inflation front, goods prices jumped 0.7% in April, pushed again by gasoline, which surged 5.5%. Services prices rose 0.3%, which included a 0.6% acceleration in the housing and utilities category and a 0.5% increase in food services and accommodations.

Housing prices broadly increased 0.5%, the biggest monthly gain going back at least until January 2025. Services excluding food, energy and housing rose just 0.2% for the month.