Inflation preferred by the Federal ReserveFederal Reserve rose just 0.2% in April, the smallest increase in a year and a half since a decline in gas prices. There were other indications that the surge in inflation might be abating.
The personal consumption price index has gone up the smallest since November 2020.
The inflation rate over the last year, based on the PCE, slowed to 6.3% in April from a 40 year high of 6.6% in March. It was the first decline since November 2020.
Inflation that omits volatile food and energy costs, known as core PCE, rose by a bit more than 0.3% in April.
The increases in the core rate of inflation in the last three months were the smallest since last summer.
The rate of core inflation in the past year has slowed to 4.9% from 5.2%. It is the second straight decline. The last time the core rate had back-to-back declines was in early 2020.
The Fed views the PCE index, the core rate in particular, as the most accurate measure of U.S. inflation. It is more comprehensive and takes into account when consumers substitute cheaper products for more expensive ones - say ground beef for filet mignon or frozen spinach for fresh.
Most Americans have never suffered such high inflation and it has caused angst on Main Street, Wall Street and Washington.
The Federal ReserveFederal Reserve is moving to raise a key short-term interest rate that it kept near zero during most of the epidemic to try and quell inflation.
The increase in interest rates on car loans, mortgages and business lending is likely to slow the economy, though Fed officials insist they can bring down inflation without triggering a recession.
Market reaction: The Dow Jones Industrial Average DJIA and S&P 500 SPX were set to open slightly higher in Friday trades. Stocks had rallied over the past two days.