Fed’s Preferred Core Inflation Gauge Hits 3.4% in May as Spending Rises 0.7%
Updated
Updated · CNBC · Jun 25
Fed’s Preferred Core Inflation Gauge Hits 3.4% in May as Spending Rises 0.7%
3 articles · Updated · CNBC · Jun 25
Summary
Core PCE rose 3.4% from a year earlier in May, the highest since October 2023, after a 0.3% monthly increase that matched forecasts.
Headline PCE accelerated to 4.1% annually and 0.4% monthly, with the report pointing to Iran-war-driven energy costs and tariffs as broader price pressures build.
Consumer spending still climbed 0.7% in May, topping estimates and outpacing inflation, while personal income also rose 0.7% and the saving rate edged up to 3%.
The hotter inflation data lands just over a week after the Fed dropped an expected 2026 rate cut and signaled a possible hike under Chairman Kevin Warsh’s tougher price-stability stance.
Other Commerce data showed the economy retaining momentum, with first-quarter GDP revised up to 2.1% and weekly jobless claims falling to 215,000.