U.S. Inflation Held at 3.8% in April as Iran War and Tariffs Keep Fed Sidelined

Inflation had been moving closer to the Federal Reserve's 2% target before the Iran war, and tariffs knocked it off course. April data confirms prices remain stubbornly elevated. The personal consumption expenditures price index rose 0.4% for the month, putting the 12-month rate at 3.8%, the Commerce Department reported Thursday. Core PCE, excluding food and energy, rose 0.2% monthly and 3.3% annually, matching forecasts. Goods prices jumped 0.7%, driven by a 5.5% surge in gasoline. Services prices rose 0.3%, with housing and utilities up 0.6%. The personal savings rate fell to 2.6%, its lowest since June 2022. First-quarter GDP growth was revised down to 1.6% from an initial 2% estimate, due to weaker consumer spending and investment. Durable goods orders surged 7.9% in April, well above the 3.5% forecast, though excluding transportation, new orders rose just 1.1%.