Inflation Gauge Surges

U.S. core inflation rose to a 3-year high, complicating Fed rate-cut hopes.

Fed’s Preferred Inflation Measure Hits Highest Level Since April 2023

Key Fed inflation gauge rises to three-year high in May after gas prices peaked

The Fed's preferred inflation gauge shows prices rising at fastest pace in 3 years

Summary

Center & Right

A neutral summary of the key facts most outlets agree on, drawn from reporting across the political spectrum.

The Federal Reserve’s preferred inflation measure, the Personal Consumption Expenditures price index, rose 4.1% from a year earlier in May, its fastest pace since April 2023 and up from 3.8% in April. Prices increased 0.4% on the month, while core PCE, excluding food and energy, rose 3.4% annually and 0.3% monthly, marking its highest annual core reading since October 2023. The acceleration, driven in part by higher energy and gas prices, underscores the Fed’s challenge in bringing inflation under control and reinforces policymakers’ tougher tone. The renewed price pressures also raise affordability concerns and create political risks for President Donald Trump and Republicans as midterm elections approach.