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US May PCE inflation rises 4.1%, keeping Fed hike in play

The Federal Reserve's preferred inflation gauge rose to 4.1% year-on-year in May. This increase was driven by an energy price shock linked to conflict in the Middle East. Strong consumer spending continues despite these rising costs.

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What changed

May PCE inflation rose to 4.1%, breaking the 4.0% threshold for the first time in three years.

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  1. US May PCE Inflation Hits 4.1%, Highest Level in Three Years

    The Federal Reserve's preferred inflation gauge rose to 4.1% year-on-year in May. This increase was driven by an energy price shock linked to conflict in the Middle East. Strong consumer spending continues despite these rising costs.

    What's confirmed:

    • The May PCE price index rose 4.1% year-on-year.
    • The core PCE price index, excluding food and energy, rose 3.4% year-on-year.
    • The annual PCE rate hit its highest level in three years.
    • Middle East conflict boosted energy prices and pushed up inflation in May.
    • The May PCE month-on-month rate was 0.4%.
    • The core PCE month-on-month rate was 0.3%.

    Still unconfirmed:

    • The inflation report could fuel concerns over higher interest rates.
    • The worst of the inflation may be over.
    • Consumers are begrudgingly spending more money as inflation rises.
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