JUNE 30, 2025 – PCE UP 0.1 PERCENT IN MAY
The Federal Reserve’s preferred inflation gauge rose 0.1 percent in May, bringing the annual inflation rate at 2.3 percent, matching expectations. The core personal consumption index (PCE) was up 0.2 percent for the month and 2.7 percent annually. The core PCE excludes volatile food and energy prices. The numbers remain above the Fed’s targeted 2 percent, but does not seem to be accelerating.
Consumer spending and income showed some weakening in May, with spending down 0.1 percent, below market expectations for a 0.1 percent increase. Personal income fell 0.4 percent, as forecasters were looking for a 0.3 percent gain. The data is consistent with a slowing economy, ahead of the potential impact of the Trump tariffs.
The data has come in as the Fed is thinking about their July meeting. Many are hoping the Fed will soon lower rates for the first time in 2025, but a July cut may be optimistic. The Fed has stated they have penciled in two cuts before the end of the year.