US inflation climbs to highest since 2023 as consumer spending and income beat forecasts
Personal consumption expenditures jumped 0.7% in May even as CPI surged to 4.2%, creating a paradox that has investors recalibrating risk across every asset class
US inflation remained sticky in May as the Federal Reserve’s preferred price gauge accelerated on an annual basis despite meeting monthly expectations.
The headline PCE price index rose 0.4% from April and 4.1% from a year earlier, while core inflation held at 0.3% month-on-month and increased to 3.4% annually, according to data released by the Bureau of Economic Analysis on Thursday.
At the same time, household finances strengthened. Personal income rose 0.7%, rebounding from a flat reading in April, while consumer spending also advanced 0.7%. After adjusting for inflation, real personal consumption expenditures increased 0.3%, supported by higher spending on both services and goods.
Disposable income also climbed 0.7%, and the personal saving rate improved to 3%.