The Personal Consumption Expenditures (PCE) Price Index release today confirmed inflation is rearing its ugly head again. The Overall inflation rate spiked to 3.5% year-over-year in the largest 1-month increase since June 2022.
While this latest jump was largely due to a rapid rise in oil prices as a result of the conflict in the Middle East, price increases were not contained to the energy sector.
The Core PCE Price Index, which removes the volatile food and energy components, also increased significantly as it rose at the fastest annual rate since November 2023. This is especially concerning as the Fed looks at Core PCE as their preferred measure of inflation, and the current rate of 3.2% is far above their 2% target. In addition, Core PCE has been moving higher for nearly a year.
The Fed continues to remain patient as they wait for further data. However, price increases have accelerated in recent months and, as stated in Jerome Powell’s final press conference as the Chair of the Federal Reserve, the FOMC is closely watching…
The labor market shows more and more signs of stability whereas inflation is kind of misbehaving.
Jerome Powell, Federal Reserve Chair – April 29, 2026
As inflation moves higher it complicates the Fed’s path forward and greatly reduces the probability of further rate cuts in the near future.