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The Federal Reserve's preferred inflation gauge accelerated in May, with the personal consumption expenditures (PCE) index rising to a 4.1% annual rate, the highest since April 2023. Core PCE, which excludes food and energy, rose to 3.4% annually, the highest since October 2023. Source: CNBC Both figures were in line with economist expectations, but underscore persistent price pressures fueled by the Iran war energy shock. Source: Fox Business
Economists noted the impact of energy costs. Heather Long of Navy Federal Credit Union said inflation is "painful for middle-class and moderate-income Americans" but that jobless claims remain low. Source: Fox Business Ellen Zentner of Morgan Stanley Wealth Management added that "sliding oil prices will take a while to work their way through the economy," keeping the Fed on hold. Source: Fox Business The report follows the Fed's decision to hold rates steady under new Chair Kevin Warsh, who has signaled a tough stance on inflation. Source: CNBC
“The Federal Reserve's preferred inflation gauge rose in May as price pressures persist in the wake of the energy shock caused by the Iran war.”
“Excluding food and energy, the personal consumption expenditures price index showed a 3.4% annual rate after rising 0.3% for the month, both in line with Dow Jones consensus.”
“The personal savings rate as a percentage of disposable personal income was 3% in May, a level that was unchanged from the prior month.”
“The report comes a little more than a week after the Fed and new Chairman Kevin Warsh delivered what markets widely viewed as a tough talk on rates and inflation.”