Core inflation rate rose to 2.7% in May, more than expected, Fed's preferred gauge shows
Source: CNBC
Published Fri, Jun 27 2025 8:35 AM EDT | Updated 6 Min Ago
Prices that consumers pay rose slightly in May, while the annual inflation rate edged further away from the Federal Reserve’s target, according to a Commerce Department report Friday.
The personal consumption expenditures price index, the Fed’s primary inflation reading, rose a seasonally adjusted 0.1% for the month, putting the annual inflation rate at 2.3%. Economists surveyed by Dow Jones had been looking for respective levels of 0.1% and 2.3%.
Excluding food and energy, core PCE posted respective readings of 0.2% and 2.7%, compared to estimates for 0.1% and 2.6%. Fed policymakers consider core to be a better measure of long-term trends because of historic volatility in the two categories. The annual rate was 0.1 percentage point ahead of the April reading.
Along with the inflation numbers, consumer spending and income showed further signs of weakening. Spending fell 0.1% for the month, compared to the estimate for an increase of 0.1%. Personal income declined 0.4%, against the forecast for a gain of 0.3%.
Read more: https://www.cnbc.com/2025/06/27/pce-inflation-report-may-2025-.html
Source - https://www.bea.gov/news/2025/personal-income-and-outlays-may-2025
Article updated.
Previous article -
Prices that consumers pay rose slightly in May, while the annual inflation rate moved further away from the Federal Reserve's target, according to a Commerce Department report Friday.
The personal consumption expenditures price index, the Fed's primary inflation reading, rose a seasonally adjusted 0.1% for the month, putting the annual inflation rate at 2.3%. Economists surveyed by Dow Jones had been looking for respective levels of 0.1% and 2.3%.
Excluding food and energy, core PCE posted respective readings of 0.2% and 2.7%, compared to estimates for 0.1% and 2.6%. Fed policymakers consider core to be a better measure of long-term trends because of historic volatility in the two categories.
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Original article -
Prices that consumers pay rose slightly in May, while the annual inflation rate moved further away from the Federal Reserve's target, according to a Commerce Department report Friday.
This is breaking news. Please refresh for updates.
= new reply since forum marked as read
Personal Income and Outlays, May 2025
Personal income decreased $109.6 billion (0.4 percent at a monthly rate) in May, according to estimates released today by the U.S. Bureau of Economic Analysis. Disposable personal income (DPI)—personal income less personal current taxes—decreased $125.0 billion (0.6 percent) and personal consumption expenditures (PCE) decreased $29.3 billion (0.1 percent).
Personal outlays—the sum of PCE, personal interest payments, and personal current transfer payments—decreased $27.6 billion in May. Personal saving was $1.01 trillion in May and the personal saving rate—personal saving as a percentage of disposable personal income—was 4.5 percent.
In the above, the bolding is in the original. I added the underlining.
And now the graph. Crucially, the left scale applies to the bars on the chart -- the DPI and Outlays - While the right scale applies to the black wavy line, the personal savings as % of DPI. (For the longest time I was looking at the May bars and comparing them to the right-side scale and thinking, this does not compute
)
Excerpt from the report again - I added the bolding
The decrease in current-dollar personal income in May primarily reflected decreases in government social benefits to persons and in farm proprietors' income that were partly offset by an increase in compensation.
The $29.3 billion decrease in current-dollar PCE in May reflected a decrease of $49.2 billion in spending on goods that was partly offset by an increase of $19.9 billion in spending for services.
Another excerpt:
The decrease in government social benefits to persons was led by Social Security payments, reflecting a decrease in payments associated with the Social Security Fairness Act.
The decrease in farm proprietors' income primarily reflected the pattern of payments from the Emergency Commodity Assistance Program as part of the American Relief Act.
