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Key Inflation Gauge Worsens as Americans Pay More for Gas
PCE Jumped to 3.8% in April Compared to 2025, Up From 3.5% in March
Key Takeaways:
- The Fed’s preferred gauge rose to 3.8% year-over-year in April, the highest since May 2023, driven largely by higher gas and food prices.
- Core inflation ticked up to 3.3%, signaling underlying inflation remains elevated even beyond volatile categories.
- With inflation well above the Fed’s 2% target, policymakers may delay rate cuts or even consider hikes, keeping pressure on consumers and the economy.
WASHINGTON — A key inflation gauge accelerated in April to the highest level in three years, the latest sign that spiking gas prices and higher food costs are squeezing Americans' finances.
Inflation jumped to 3.8% in April compared with a year ago, the Commerce Department said May 28, up from 3.5% in March and the highest since May 2023.
On a monthly basis, prices rose 0.4%, down from the 0.7% jump in March.
The report showed that prices have risen for many items in addition to gas, indicating that inflation could persist and pose problems for congressional Republicans in this year's midterm elections.
Inflation is also notably above the Federal Reserve's target of 2%, which means Fed policymakers may decide to forgo any cuts to their key short-term interest rate this year. Some officials have signaled that their next move could be a hike rather than a cut.
Excluding the volatile food and energy categories, core inflation rose to 3.3% in April from 3.2% the previous month. It is the highest core figure since November 2023.
JUST IN: PCE Inflation in the US jumped to 3.8% in April –> the highest in three years (since May 2023).
Core PCE (excluding food & energy) rose to 3.3% --> the highest since fall 2023.
The monthly gains were a tad smaller than expected (0.4% for PCE and 0.2% for Core PCE), but… pic.twitter.com/mQbbVryMRb — Heather Long (@byHeatherLong) May 28, 2026
One positive sign in the report: Core prices rose just 0.2% in April from March.
