Updated at 9:14 am EST
The Federal Reserve's preferred measure of U.S. inflation eased further from multi-decade highs last month, data indicated Friday, adding to investors hopes that consumer price pressures have peaked in the world's biggest economy.
The April core PCE Price Index rose 4.9% from last year, easing from the highest levels since 1983, and 0.3% on the month, the Bureau of Economic Analysis reported, a figure that was largely in line with Wall Street forecasts and continues to indicate signs of easing consumer price pressures. The March increase estimate was confirmed at 0.3%.
The headline PCE index was up only 0.2% on the month and 6.3% on the year, down from the highest levels since 1980. Personal income rose by a slower-than-expected pace of 0.3%, while personal spending rose 0.9%, the BEA noted, just ahead of the Street consensus forecast of a 0.7% advance.
The Bureau of Labor Statistics said earlier this month that its headline consumer price index for the month of April rose 8.3% from last year, down from the 8.5% pace in March - the fastest rate since December of 1981. On a monthly basis, inflation was up 0.3%, the BLS said, compared to the March surge of 1.2%.
"Declines in prices for used cars and apparel, and slower increases across a range of services ex-housing -- likely thanks to the moderation in wage growth in recent month -- have eased the pressure on inflation, at the margin," said Ian Shepherdson of Pantheon Macroeconomics. "We expect a further slowing through the second half, but the pace of the decline is heavily contingent on the speed and extent of the compression in retail and wholesale margins, on the back of the inventory rebuild."
Stocks on Wall Street futures extended gains following the data release, with futures tied to the Dow Jones Industrial Average indicating a 115 point opening bell decline and those linked to the S&P 500, which is down 14.8% for the year, are priced for a 29 point move to the upside.
Benchmark 10-year U.S. Treasury bond yields edged higher, to 2.74% while the US dollar index, which tracks the greenback against a basket of six global currencies, fell further to a one-month low of 101.77.
The CME Group's FedWatch tool is showing a 97.6% chance of a 50 basis point rate hike in June, as well as a 93.3% chance of follow-on move of 50 basis points in July.
The Atlanta Federal Reserve's GDPNow forecasting tool, a real-time benchmark, suggests U.S. economic growth is growing at a 1.8% clip, while the Commerce Department's second estimate of first quarter growth showed a contraction of 1.5%, the first in two years.