May’s inflation rate dropped to 3.8%, as per Fed’s key gauge.
Inflation Falls to 3.8% Annual Rate in May
The latest data from the Bureau of Economic Analysis reveals that inflation, as measured by the gauge favored by the Federal Reserve, has fallen to a 3.8% annual rate in May. This decline indicates that inflationary pressures are easing amidst the Fed’s efforts to slow down economywide spending by raising interest rates.
However, it’s important to note that inflation is still higher than the central bank’s target, which is impacting household purchasing power.
Core PCE Inflation at 4.6% Year-Over-Year Rate
When looking at core PCE inflation, which excludes energy and food prices and is generally less volatile, the rate stands at 4.6% year-over-year. This measure suggests that prices are gradually returning to normal after last year’s significant inflationary surge.
The consumer price index also reflects a decrease in inflation, with a 4% annual rate in May compared to 4.9% the previous month. This downward trend has been ongoing since last June, and the current CPI inflation rate is the lowest since March 2021.
Furthermore, the producer price index, which tracks wholesale prices of goods, indicates a 1.1% annual rate of inflation in May. These prices eventually trickle down to consumers.
Economy Beats Expectations, But Unemployment Rate Rises
Despite inflation concerns, the economy continues to outperform expectations. In May, an additional 339,000 jobs were added. However, the unemployment rate did rise from 3.4% to 3.7%. Additionally, there was a deceleration in average hourly earnings growth for the month.
Yesterday, the Bureau of Economic Analysis also revised its estimate for first-quarter GDP growth, increasing it to a 2% annual rate from the previously estimated 1.3%.
The Federal Reserve’s target rate currently stands at 5% to 5.25%, the highest it has been since the financial crisis in 2008.
For more information, click here to read more from The Washington Examiner.
" Conservative News Daily does not always share or support the views and opinions expressed here; they are just those of the writer."
*As an Amazon Associate I earn from qualifying purchases
