PCE report: Fed's preferred inflation measure hits 3-year high, keeping talk of

The Federal Reserve's preferred inflation gauge showed prices heated up to the highest level in three years, likely keeping the central bank holding interest rates steady with an eye toward hiking if inflation doesn't dissipate.

The Personal Consumption Expenditures index rose 4.1% in May, in line with expectations, and up from 3.8% in April. Month over month, inflation rose to 0.4%, a tenth of a percentage point less than expectations and the same level as April.

Excluding volatile energy and food prices, the way the Fed prefers to assess the inflation gauge, "core" PCE rose to 3.4%, in line with expectations and up from 3.3% in April. Month over month, core inflation rose to 0.3% vs. 0.2% in April. This marked the highest level since October 2023.

Higher energy prices have pushed up overall inflation, but even excluding them, core inflation is also moving higher, signaling that the broadening of price pressures seen in April continued in May.

"A pickup in core inflation was the most important part of today's economic releases, adding to the likelihood that the Fed raises rates in the next 12 months," said Bill Adams, chief US economist for Fifth Third Commercial Bank. "The Fe

Fuente original: Yahoo Finance (https://finance.yahoo.com/economy/policy/article/pce-report-feds-preferred-inflation-measure-hits-3-year-high-keeping-talk-of-possible-rate-hike-in-play-124158491.html)