Core inflation rate hit 3.4% in May, highest since October 2023, Fed’s preferred gauge shows

Core inflation, excluding volatile food and energy prices, rose to 3.4% in May, marking the highest rate since October 2023, according to the Federal Reserve's preferred inflation gauge. This figure exceeded economists' expectations, who had projected the personal consumption expenditures (PCE) price index to show a 4.1% annual increase. The core PCE price index, a key metric for the Federal Reserve's monetary policy decisions, increased by 0.2% from the previous month. This monthly gain represents a slowdown from the 0.3% increase observed in April. On a year-over-year basis, the core PCE price index advanced 2.8%, a slight deceleration from the 2.9% annual rate recorded in April. The Federal Reserve aims to bring inflation down to its 2% target, and these persistent inflation readings continue to influence its policy outlook. The data was released on June 28, 2024.