Economic Report: Raging U.S. inflation is starting to cool, key price gauge signals

by | Jun 30, 2022 | Stock Market

The numbers: A key gauge of U.S. inflation rose 0.6% in May largely due to the higher cost of gas and food, but there were renewed signs that price pressures were starting to ease. The increase in the so-called personal consumption price index was triple the 0.2% gain in April.

But a narrower measure of inflation that omits volatile food and energy costs, known as the core PCE, rose by relatively modest 0.3% for the fourth month in a row. That was below Wall Street’s 0.4% forecast. The rate of inflation over the past year was unchanged at 6.3% in April. The yearly rate has backed off a little after touching a 40-year high a few months ago. The core rate of inflation slowed to 4.7% in the 12 months ended in May from 4.9% in April and 5.2% in March. The inflation readings in the core PCE rate from February through May were the smallest since the end of 2020. Unlike it’s better-known cousin, the consumer price index, the PCE gauge takes into account how consumers change their behavior in response to higher prices. They might substitute cheaper goods for more expensive ones to keep their costs down, for example. The Federal Reserve views the PCE index as the best barometer of inflatio …

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