The latest reading of the Fed’s preferred inflation gauge showed inflation eased in May, with prices rising at their slowest pace since March 2021.
The core personal consumption expenditures (PCE) index, which excludes the cost of food and energy and is closely watched by the Federal Reserve, rose 0.1% in May from the previous month, in line with Wall Street expectations and slower than the 0.3% increase seen in April.
Core PCE rose 2.6% from a year earlier in May, in line with estimates and unchanged from the annual increase seen in the past two months. The May figure marks the slowest annual increase in more than three years.
This report follows other promising inflation figures for May. The latest reading of the Consumer Price Index (CPI) showed core prices rose 0.2% from the previous month, less than economists’ estimates.
But after surprisingly strong inflation numbers earlier this year, Federal Reserve officials remained cautious about the trend in inflation, noting in their latest policy statement that it would not be appropriate to cut rates until they had “greater confidence” in the path of inflation.
“There has been further modest progress toward our inflation objective,” Fed Chairman Jerome Powell said at a June 12 news conference. “We will need more reliable data to strengthen our confidence that inflation is moving sustainably toward 2 percent.”
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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