US Inflation: Core PCE Up 0.3% in May, Lower Than Expected

The core PCE (consumer spending price index) in the United States rose 0.3% in May on a monthly basis and 4.7% on an annual basis, according to data released this Thursday (30) by the US Department of Commerce.

The result was below market expectations, as the Refinitiv consensus projected a rise of 0.4% on a monthly basis and 4.8% on an annual basis.

The indicator is important because it is one of the main references of the Fed (Federal Reserve, the American Central Bank) in its monetary policy decisions, to define the country’s basic interest rate (which affects stock markets around the world).

There is a fear that higher-than-expected inflation will force the Fed to be more aggressive in the cycle of rising interest rates and bring down (even more) stock markets not only in the US.

energy and food

Core PCE excludes more volatile prices such as food and energy. Considering these prices, US consumer inflation was 0.6% on a monthly basis and 6.3% on an annual basis.

“Full” inflation has been much higher in the US because both food and energy prices have been under pressure in recent months. Food products rose 11.0% in one year and energy, 35.8%.

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