2023-06-30 18:14:10
The Fed’s preferred indicator of US inflation slowed
The US Federal Reserve’s preferred measure of inflation slowed last month, as consumers cut their spending as the economy slowed, according to data released Friday by the US Department of Commerce.
Personal consumption expenditures rose 3.8% for the 12-month period ending in May, down from a revised annual increase of 4.3% in April. This represents the lowest rate of increase since April 2021.
On a monthly basis, prices increased by only 0.1%.
It is a more moderate pace than the revised 0.6% growth rate in April.
Consumers continued to spend their money on services in May, particularly for medical care and travel, as their purchases of goods declined.
The core personal consumption expenditures index, which is closely watched by the Federal Reserve and excludes volatile food and energy prices, fell slightly to 4.6% from 4.7%, its lowest level since October. 2021. On a monthly basis, the core index increased by 0.3%.
Consumer spending indicators are part of the Personal Income and Expenditure report, which provides a more comprehensive view of price shifts, including how consumers respond to them and how much they spend and save.
This indicator is closely watched by the Federal Reserve, which decided earlier this month not to raise the benchmark interest rate for the eleventh time in a row, and preferred to pause to review economic data and banking activity in addition to the effects of monetary tightening.
George Mathew, chief investment officer at K-Bank, wrote in a statement that the data shows an improvement in economic resilience and shows efforts to combat inflation, but stressed that more evidence is still needed.
He added that the current mission of the Federal Bank is not clear, and although the board may not stop raising prices, it may not have many options during the coming period.
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