Thu. Jul 25th, 2024


The latest reading of the Fed’s preferred inflation gauge showed inflation eased in May as prices increased at their slowest pace since March 2021.

The core Personal Consumption Expenditures (PCE) index, which strips out the cost of food and energy and is closely watched by the Federal Reserve, rose 0.1 % in May from the prior month, in line with Wall Street’s expectations and slower than the 0.3% increase seen in April.

Core PCE was up 2.6% over the prior year in May, in line with estimates. May’s reading marked the slowest annual gain in more than three years.

The report follows other promising May inflation prints. The most recent reading of the Consumer Price Index (CPI) showed core prices climbed 0.2% from the prior month, lower than economists’ estimates.

But after surprisingly hot inflation readings to start the year, Federal Reserve officials have remained cautious about inflation’s trend, noting in their most recent policy statement it won’t be appropriate to cut rates until they have “greater confidence” in inflation’s path.

“There has been modest further progress toward our inflation objective,” Fed chair Jerome Powell said during a press conference on June 12. “We will need to see more good data to bolster our confidence that inflation is moving sustainably toward 2 percent.”

WASHINGTON, DC - JUNE 12: Federal Reserve Bank Chair Jerome Powell announces that interest rates will remain unchanged during a news conference at the Federal Reserves’ William McChesney Martin building on June 12, 2024 in Washington, DC. Following the two-day Federal Open Markets Committee meeting Powell said the Fed has decided to keep their current rate range of 5.25-5.50 percent and signaled that it believes long-run rates will stay higher than previously indicated.  (Photo by Kevin Dietsch/Getty Images)WASHINGTON, DC - JUNE 12: Federal Reserve Bank Chair Jerome Powell announces that interest rates will remain unchanged during a news conference at the Federal Reserves’ William McChesney Martin building on June 12, 2024 in Washington, DC. Following the two-day Federal Open Markets Committee meeting Powell said the Fed has decided to keep their current rate range of 5.25-5.50 percent and signaled that it believes long-run rates will stay higher than previously indicated.  (Photo by Kevin Dietsch/Getty Images)

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

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