The first inflation report under new Fed chief Kevin Warsh shows prices at highest in nearly 3 years The latest inflation report reveals consumer prices reached their highest level in almost three years in April, with the PCE price index rising at an annual rate of 3.8%. This surge, exacerbated by energy costs due to the Iran war, challenges the Federal Reserve’s predictions and complicates new chief Kevin Warsh’s role. Income growth has slowed to 2.5%, falling below the inflation rate, causing households to lose purchasing power and depleting personal savings.

• Consumer prices in April hit their highest level in nearly three years.
• The personal consumption expenditures price index rose 3.8% annually in April, up from 3.5% in March.
• Core PCE, excluding energy and food, rose 3.3% in April, meeting forecasts.
• Inflation is partly driven by the impact of the Iran war on energy prices.
• Annual personal income growth slowed to 2.5%, lagging behind inflation.
• Consumer spending rose 0.5% in April, but adjusted for inflation, it only increased by 0.1%.
• The personal savings rate fell to 2.6% in March from 3.6%, indicating households are using savings to cover costs.
• There is a growing probability of a Federal Reserve rate hike in December.