The Fed's favorite inflation gauge shows prices rose just 0.1% last month | CNN Business

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The Federal Reserve’s preferred inflation gauge cooled off last month

The Personal Consumption Expenditures price index rose 3.8% for the 12 months ended in May, which was down from the revised 4.3% annual increase seen in April. It marks the lowest level since April 2021. On monthly basis, prices were up a mere 0.1%. Personal spending ticked up by just 0.1%, a more moderate pace than April’s revised 0.6% growth rate. In May, consumers continued to put their dollars toward services — particularly for medical care and travel — while pulling back on goods purchases.

The PCE indexes are part of the Personal Income and Outlays report, which provides a more comprehensive look at shifts in prices, including how consumers respond to them and how much consumers are spending, bringing in and saving. The report is watched like a hawk by the Fed, which earlier this month opted not to hike its benchmark rate for an 11th consecutive time, instead pausing to review the economic data, banking activity as well as the effects of monetary tightening.

 

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