THE BASIS POINT

Rates Better As Fed’s Favorite Inflation Measure Is Tame In April. Savings Rate At 3.6%. (CHARTS)

Rates are slightly better today following a key inflation report this morning. Overall Personal Consumption Expenditures, the Fed’s favorite measure of consumer inflation, were unchanged in April and 2% year-over-year through April. Excluding volatile oil and food costs from the readings, “Core” PCE price index was 0.1% for April and 1.2% YOY through April. The Fed looks closely at Core PCE excluding food and energy prices because of the price volatility of these two items, and the Fed’s zone for reasonable inflation is 1-2% per year. At 1.2%, Core inflation is within their comfort zone, and PCE inflation has been stable since summer 2009.

Personal income was up 0.4% in April after increasing the same in March, not changing in February, and increasing 0.3% percent in January. Wages rose 0.4%, which is roughly the same monthly level for all of 2010. The household savings rate was 3.6%, down from 4.8% in December and from the May 2009 all-time record of 6.9%. Below are all key details from the Personal Income & Outlays report. You can automatically create charts and download historical PCE data by scrolling to our data section on the right side of the site, or visiting our Data page.

PersonalIncomeApril2010