After accelerating significantly in March, The Fed's favorite inflation indicator - Core PCE (a measure of price changes in consumer goods and services that excludes volatile food and energy costs) - rose 0.2% MoM in April (less than expected +0.3% MoM), but pulled up the YoY measure to +3.3% (as expected) - its highest since Nov 2023.

The rise in Services costs (headlined by Housing & Utilities, Financial Services, and Healthcare) dominated the increase in Core PCE YoY...

The headline PCE jumped 0.4% MoM (+0.5% MoM exp) dragging the YoY up to +3.8% - the hottest read since May 2023

The impact of the war is evident in crude prices and the PCE's energy index, but arguably, this is as bad as it gets in terms of inflation...

Higher prices were met with higher spending (+0.5% MoM notional) but flat income growth (0.0% MoM)...

With the growth in spending versus de-growth in incomes more evident below...

Sending the savings rate plunging to its lowest since June 2022...

With the savings rate barely above record lows, it seems that Americans are digging into their savings to keep up with inflation. No wonder sentiment is so low...