The Federal Reserve’s preferred measure of inflation showed inflation remained stubbornly high in May, but at a slightly lower monthly pace than expected.
Core personal consumption expenditures (PCE) prices rose 4.7% year-on-year, down 0.2 percentage points from the previous month, but still near the highest level since the 1980s. Wall Street estimates were around 4.8%.
On a monthly basis, core PCE prices excluding volatile food and energy prices rose 0.3% from the previous month, slightly lower than theDow Jones“estimated 0.4%.
Headline inflation, however, surged even higher, rising 0.6% for the month, well above April’s 0.2% monthly gain. Year-on-year inflation held at 6.3%, unchanged from April and slightly down from 6.6% in March, the highest reading since January 1982.
In addition, the report also reflects the pressure on consumer spending, which accounts for nearly 70% of all economic activity in the United States.
While personal income rose 0.5% in May, beating expectations for a 0.4% gain, after-tax income and other expenses, or disposable personal income, fell 0.1%. Inflation-adjusted spending fell 0.4%, down sharply from a 0.3% increase in April.
The personal savings rate edged up to 5.4%, up 0.2 percentage points from the previous month.